Macroeconomic and Health

Macroeconomics and Health:
Investing in Health for

Economic Development
let me say that I hope we keep our voice clear and strong on the
central task of raising the health of the poor. I can be realistic and
cynical with the best of themgiving all the reasons why things are
too hard to change. We must dream a bit, not beyond the feasible but
to the limits of the feasible, so that we inspire. I think that we are an
important voice speaking on behalf of the worlds most voiceless people todaythe sick and dying among the poorest of the poor. The
stakes are high. Lets therefore speak boldly so that we can feel confident that we have fulfilled our task as well as possible.
Taken by the editor from emailed
correspondence from Jeffrey Sachs
to the Commissioners and others
working on this effort.
Information concerning the content of the report should be referred to:

Professor Jeffrey D. Sachs
Center for International Development at Harvard University
John F. Kennedy School of Government
79 John F. Kennedy Street
Cambridge, MA 02138 USA
http://www.cid.harvard.edu
jeffrey_sachs@harvard.edu
Copies of this publication can be obtained from:

World Health Organization
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Report of the Commission on Macroeconomics and Health
Chaired by
Jeffrey D. Sachs
Presented to Gro Harlem Brundtland,

Director-General of the
World Health Organization,
on 20 December 2001

Geneva
WHO Library Cataloguing-in-Publication Data

Macroeconomics and health: Investing in health for economic development.
Report of the Commission on Macroeconomics and Health
1.Financing, Health 2 Investments 3. Economic development
4.Delivery of health care 5.Poverty 6.Developing countries
7. Developed countries I.WHO Commission on Macroeconomic and Health
ISBN 92 4 154550 X (NLM classification: WA 30)
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World Health Organization 2001
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This report contains the collective views of the Commission on Macroeconomics and
Health and does not necessarily represent the decisions or the stated policies of the
World Health Organization.
Printed in Canada
2001/13984
Editorial management: Dyna Arhin-Tenkorang, M.D., Ph.D.
Editor: Hope Steele
Design and production: Digital Design Group, Newton, MA USA
Contents
Executive Summary of the Report
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
The Commission Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Evidence on Health and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Channels of Influence from Disease to Economic Development . . . . . . . . . . . . . .30
The Epidemiology of Disease in Low-Income Countries . . . . . . . . . . . . . . . . . . . .40
Addressing the Disease Burden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
The AIDS Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Levels of Health Spending in Low-Income Countries . . . . . . . . . . . . . . . . . . . . . . .53
Mobilizing Greater Domestic Resources for Health . . . . . . . . . . . . . . . . . . . . . . . . .57
Removing the Nonfinancial Constraints to Health Services . . . . . . . . . . . . . . . . . .64
Placing the Health Sector into a Broader Context of Health Promotion . . . . . .73
The Supply of Global Knowledge in the Fight Against Disease . . . . . . . . . . . . . .76
Access to Essential Medicines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
The Macroeconomic Benefits of Scaling Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
Appendix 1
Participants, Reports, and Working Papers for the
Commission on Macroeconomics and Health . . . . . . . . . . . . . . . . . . . .129
Members of the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129
WG1 Health, Economic Growth, and Poverty Reduction . . . . . . . . . . . . . . . . . .132
WG2 Global Public Goods for Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
WG3 Mobilization of Domestic Resources for Health . . . . . . . . . . . . . . . . . . . . .134
WG4 Health and the International Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136
WG5 Improving Health Outcomes of the Poor . . . . . . . . . . . . . . . . . . . . . . . . . . .137
WG6 Development Assistance and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137
Biographical Sketches of Commission Members . . . . . . . . . . . . . . . . . .141

Reports and Working Papers
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151
Titles of Reports of CMH Working Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151

Working Paper Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151
Appendix 2
Analysis of the Costs of Scaling Up Priority
Health Interventions in Low- and Selected
Middle-Income Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157
Analysis by Development Assistance CommitteeBased Income
Classification and Disease Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157
Analysis of Cost Estimates by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
References
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .177
Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183

Policy Memorandums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185

The Commission on Macroeconomics and Health (CMH) was established

by World Health Organization Director-General Gro Harlem Brundtland
in January 2000 to assess the place of health in global economic development. Although health is widely understood to be both a central goal and
an important outcome of development, the importance of investing in
health to promote economic development and poverty reduction has been
much less appreciated. We have found that extending the coverage of crucial health services, including a relatively small number of specific interventions, to the worlds poor could save millions of lives each year, reduce
poverty, spur economic development, and promote global security.
This report offers a new strategy for investing in health for economic development, especially in the worlds poorest countries, based upon a
new global partnership of the developing and developed countries. Timely
and bold action could save at least 8 million lives each year by the end of
this decade, extending the life spans, productivity and economic wellbeing of the poor. Such an effort would require two important initiatives:
a significant scaling up of the resources currently spent in the health sector by poor countries and donors alike; and tackling the non-financial
obstacles that have limited the capacity of poor countries to deliver health
services. We believe that the additional investments in healthrequiring
of donors roughly one-tenth of one percent of their national income
would be repaid many times over in millions of lives saved each year,
enhanced economic development, and strengthened global security.
Indeed, without such a concerted effort, the worlds commitments to
improving the lives of the poor embodied in the Millennium Development
Goals (MDGs) cannot be met.
In many respects, the magnitude of the scaled-up effort reflects the
extremely low levels of income in the countries concerned, the resulting
paltry current levels of spending on health in those countries, and the costs
required for even a minimally adequate level of spending on health.
Because such an ambitious effort cannot be undertaken in the health sector alone, this Report underscores the importance of an expanded aid
effort to the worlds poorest countries more generally. This appears to us
of the greatest importance at this time, when there has been an enhanced
awareness of the need to address the strains and inequities of globalization.
We call upon the world community to take heed of the opportunities
for action during the coming year, by beginning the process of dramatically scaling up the access of the worlds poor to essential health services.
With bold decisions in 2002, the world could initiate a partnership of rich
and poor of unrivaled significance, offering the gift of life itself to millions
of the worlds dispossessed and proving to all doubters that globalization
can indeed work to the benefit of all humankind.
November 2001
Jeffrey D. Sachs, Chair
Isher Judge Ahluwalia
K. Y. Amoako
Eduardo Aninat
Daniel Cohen
Zephirin Diabre
Eduardo Doryan
Richard G. A. Feachem
Robert Fogel
Dean Jamison
Takatoshi Kato
Nora Lustig
Anne Mills
Thorvald Moe
Manmohan Singh
Supachai Panitchpakdi
Laura Tyson
Harold Varmus
Acknowledgments
The Commissioners wish to thank WHO Director-General Dr. Gro

Harlem Brundtland for her vision in establishing and actively supporting
the work of the Commission. Vital support came from all of the Working
Group Chairs, and the Commissioners wish to acknowledge the extraordinary work of Chairs Isher Judge Alhuwalia, George Alleyne, Kwesi
Botchwey, Daniel Cohen, Zephirin Diabre, Richard Feachem, Prabhat
Jha, Chris Lovelace, Anne Mills, Carin Norberg, and Alan Tait. WHO
executive directors and senior policy advisors to the Director-General also
made invaluable inputs. The Commissioners are also indebted to the members of the Working Groups and the authors of the commissioned papers,
whose names are listed in the Acknowledgments. Dyna Arhin-Tenkorang
served skillfully as Senior Economist and Special Assistant to the
Chairman. Technical assistance and help in the drafting of the Report also
came from hundreds of dedicated individuals around the world. Among
the many individuals who devoted especially long hours to the preparation
of the Report, we would like to pay special thanks to Peter Heller, Paul
Isenman, Inge Kaul, and Susan Stout.
The WHO Secretariat, led by Sergio Spinaci, with able assistance provided by Eveline Coveney, Aquilina John-Mutaboyerwa, and Elisa Pepe,
skillfully supported the Project in every way. The Commissioners also
gratefully acknowledge the editorial assistance in the preparation of the
Report of Hope Steele and Marc Kaufman.
The Commission gratefully acknowledges the financial support provided by the Bill and Melinda Gates Foundation, the United Kingdom
Department for International Development, the Grand Duchy of
Luxembourg, the Government of Ireland, the Government of Norway, the
Rockefeller Foundation, the Government of Sweden, and the United
Nations Foundation.
Executive Summary of the Report
Technology and politics have thrust the world more closely together than
ever before. The benefits of globalization are potentially enormous, as a
result of the increased sharing of ideas, cultures, life-saving technologies,
and efficient production processes. Yet globalization is under trial, partly
because these benefits are not yet reaching hundreds of millions of the
worlds poor, and partly because globalization introduces new kinds of
international challenges as turmoil in one part of the world can spread
rapidly to others, through terrorism, armed conflict, environmental degradation, or disease, as demonstrated by the dramatic spread of AIDS
around the globe in a single generation.
The worlds political leaders have recognized this global interdependence in solemn commitments to improve the lives of the worlds poor by
the year 2015. The Millennium Development Goals (MDGs), adopted at
the Millennium Summit of the United Nations in September 2000, call for
a dramatic reduction in poverty and marked improvements in the health
of the poor. Meeting these goals is feasible but far from automatic. Indeed,
on our current trajectory, those goals will not be met for a significant proportion of the worlds poor. Success in achieving the MDGs will require a
seriousness of purpose, a political resolve, and an adequate flow of
resources from high-income to low-income countries on a sustained and
well-targeted basis.
The importance of the MDGs in health is, in one sense, self-evident.
Improving the health and longevity of the poor is an end in itself, a fundamental goal of economic development. But it is also a means to achieving the other development goals relating to poverty reduction. The linkages of health to poverty reduction and to long-term economic growth are
powerful, much stronger than is generally understood. The burden of disease in some low-income regions, especially sub-Saharan Africa, stands as
a stark barrier to economic growth and therefore must be addressed
frontally and centrally in any comprehensive development strategy. The
AIDS pandemic represents a unique challenge of unprecedented urgency
and intensity. This single epidemic can undermine Africas development
over the next generation, and may cause tens of millions of deaths in
Macroeconomics and Health
Table 1. Life Expectancy and Mortality Rates, by Country Development
Category, (19952000)
Development Category
Least-Developed
Countries
Population Annual
(1999
Average
millions)
Income
(US dollars)
Life
Expectancy
at Birth
(years)
Infant
Mortality
(deaths before
age 1 per 1,000
live births)
Under Five
Mortality
(deaths before
age 5 per
1,000 live
births)
643
296
51
100
159
Other Low-Income
Countries
1,777
538
59
80
120
Lower-MiddleIncome Countries
2,094
1,200
70
35
39
Upper-MiddleIncome Countries
573
4,900
71
26
35
High-Income Countries
891
25,730
78
Memo: sub-Saharan Africa
642
500
51
92
151
Source: Human Development Report 2001, Table 8, and CMH calculations using World
Development Indicators of the World Bank, 2001.
India, China, and other developing countries unless addressed by greatly

increased efforts.
Our Report focuses mainly on the low-income countries and on the
poor in middle-income countries.1 The low-income countries, with 2.5 billion peopleand especially the countries in sub-Saharan Africa, with 650
million peoplehave far lower life expectancies and far higher age-adjusted mortality rates than the rest of the world, as shown in the accompanying Table 1. The same is true for the poor in middle-income countries,
such as China. To reduce these staggeringly high mortality rates, the control of communicable diseases and improved maternal and child health
remain the highest public health priorities. The main causes of avoidable
deaths in the low-income countries are HIV/AIDS, malaria, tuberculosis
(TB), childhood infectious diseases, maternal and perinatal conditions,
micronutrient deficiencies, and tobacco-related illnesses. If these conditions were controlled in conjunction with enhanced programs of family
planning, impoverished families could not only enjoy lives that are longer,
healthier, and more productive, but they would also choose to have fewer
children, secure in the knowledge that their children would survive, and
could thereby invest more in the education and health of each child. Given
Executive Summary
the special burdens of some of these conditions on women, the well-being

of women would especially be improved. The improvements in health
would translate into higher incomes, higher economic growth, and
reduced population growth.
Even though we focus mainly on communicable diseases and maternal and perinatal health, noncommunicable diseases (NCDs) are also of
great significance for all developing countries; for many middle-income
countries the mortality from communicable diseases has already been significantly reduced so that the NCDs tend to be the highest priority. Many
of the noncommunicable diseases, including cardiovascular disease, diabetes, mental illnesses, and cancers, can be effectively addressed by relatively low-cost interventions, especially using preventative actions relating
to diet, smoking, and lifestyle.2 Our global perspective on priorities needs
to be complemented by each country analyzing its own health priorities
based on detailed and continually updated epidemiological evidence. Our
argument for outcome-oriented health systems also implies substantial
capacity to deal with a range of conditions not detailed here, such as lowcost case-management of mental illness, diabetes and heart attacks. The
evidence also suggests that approaches required to scale up the health system to provide interventions for communicable diseases and reproductive
health will also improve care for the NCDs.3
The feasibility of meeting the MDGs in the low-income countries is
widely misjudged. On the one side of the debate are those optimists who
believe that the health goals will take care of themselves, as a fairly automatic byproduct of economic growth. With the mortality rates of children
under 5 in the least-developed countries standing at 159 per 1,000 births,
compared with 6 per 1,000 births in the high-income countries,4 these
blithe optimists assume that its just a matter of time before the mortality
rates in the low-income world will converge with those of the rich countries. This is false for two reasons. First, the disease burden itself will slow
the economic growth that is presumed to solve the health problems; second, economic growth is indeed important, but is very far from enough.
Health indicators vary widely for the same income level. The evidence suggests that 73 countries are far behind in meeting the MDGs for infant
mortality, and 66 are far behind for meeting the MDGs for child mortality.5 The disease burden can be brought down in line with the MDGs only
if there is a concerted, global strategy of increasing the access of the
worlds poor to essential health services.
On the other side of the debate are the pessimists, who underestimate
the considerable progress that has been made in health (with the notable
exception of HIV/AIDS) by most low-income countries and believe that
their remaining high disease burden is a byproduct of corrupt and broken
health systems beyond repair in poorly governed low-income countries.
This alternative view is also filled with misunderstanding and exaggeration. The epidemiological evidence conveys a crucial message: the vast
majority of the excess disease burden is the result of a relatively small
number of identifiable conditions, each with a set of existing health interventions that can dramatically improve health and reduce the deaths associated with these conditions. The problem is that these interventions dont
reach the worlds poor. Some of the reasons for this are corruption, mismanagement, and a weak public sector, but in the vast majority of countries, there is a more basic and remediable problem. The poor lack the
financial resources to obtain coverage of these essential interventions, as
do their governments. In many cases, public health programs have not
been modified to focus on the conditions and interventions emphasized
here.
The key recommendation of the Commission is that the worlds lowand middle-income countries, in partnership with high-income countries,
should scale up the access of the worlds poor to essential health services,
including a focus on specific interventions. The low- and middle-income
countries would commit additional domestic financial resources, political
leadership, transparency, and systems for community involvement and
accountability, to ensure that adequately financed health systems can
operate effectively and are dedicated to the key health problems. The highincome countries would simultaneously commit vastly increased financial
assistance, in the form of grants, especially to the countries that need help
most urgently, which are concentrated in sub-Saharan Africa. They would
resolve that lack of donor funds should not be the factor that limits the
capacity to provide health services to the worlds poorest peoples.
The partnership would need to proceed step by step, with actions in
the low-income countries creating the conditions for donor financing,
while ample donor financing creates the financial reality for a greatly
scaled-up, more effective health system, with the shared program subject
to frequent review, evaluation, verification, and mid-course corrections.
The chicken-and-egg problem of deciding whether reform or donor
financing must come first would be put aside with both donors and recipients frankly acknowledging that both finance and reform are needed at
Executive Summary
each stage, and that both must be sustained by an intensive partnership.

For lower-middle-income countries with large concentrations of poor, a
prime task of national governments would be to mobilize additional
resources to finance priority interventions that assure coverage of the poor
within those societies.
The commitment of massive additional financial resources for health,
domestic and international, may be a necessary condition for scaling up
health interventions, but the Commission recognizes that such a commitment will not be sufficient. Past experience shows compellingly that political and administrative commitments on the part of both donors and
countries are key to success. Building health systems that are responsive to
client needs, particularly for poor and hard-to-reach populations, requires
politically difficult and administratively demanding choices. Some issues,
such as relative commitments to the health needs of rich and poor, relate
to the health sector. Others, such as whether the public sector budget and
procurement systems work or whether there is effective supervision and
local accountability of public service delivery, are public management
issues. Underlying these issues are broader questions of governance, conflict, and the relative importance of development and poverty reduction in
national priorities.
The Commission recognizes the importance of these and other constraints and treats them in depth in several places in this Report. Success
will require strong political leadership and commitment on the part of
countries that can afford to contribute resources as well as from developing countriesin the private and public sectors and in civil society as well.
It requires the evolution of an atmosphere of honesty, trust, and respect in
donor-recipient interactions. Success requires special efforts precisely in
those settings in which health conditions are most troubling and where
public sectors are weak. Donor support should be readily forthcoming to
help overcome these constraints. Where countries are not willing to make
a serious effort, though, or where funding is misused, prudence and credibility require that large-scale funding should not be provided. Even here,
though, the record shows that donor assistance can do much to help, by
building local capacity and through the involvement of civil society and
NGOs. This is a daunting challenge, yet one that is more than ever a
strategically relevant objective. Governments and leaders who help stimulate and nurture these actions will be providing a specific antidote to the
despair and hatred that poverty can breed.
The Commission worked hard to examine whether the low-income

countries could afford to fund the health systems out of their own
resources if they were to eliminate existing wasteful spending in health
and other areas. Our findings are clear: poverty itself imposes a basic
financial constraint, though waste does exist and needs to be addressed.
The poor countries should certainly improve health-sector management,
review the current balance among health-sector programs, and raise
domestic resources for health within their limited means. We believe that
it is feasible, on average, for low- and middle-income countries to increase
budgetary outlays for health by 1 percent of GNP by 2007 and 2 percent
of GNP by 2015 compared with current levels, though this may be optimistic given intense competing demands for scarce public resources. Lowand middle-income countries could also do more to make the current
spending, public and private, more equitable and effective. Public spending should be better targeted to the poor, with priorities set on the basis of
epidemiological and economic evidence. There is scope for private out-ofpocket spending in some cases being replaced with prepaid community
financing schemes. Yet for the low-income countries, we still find a gap
between financial means and financial needs, which can be filled only by
the donor world if there is to be any hope of success in meeting the MDGs.
In most middle-income countries, average health spending per person
is already adequate to ensure universal coverage for essential interventions. Yet such coverage does not reach many of the poor. Exclusion is
often concentrated by region (e.g., rural western China and rural northeast Brazil), or among ethnic and racial minorities. For whatever reason,
public-sector spending on health does not attend sufficiently to the needs
of the poor. Moreover, since many middle-income countries provide inadequate financial protection for large portions of their population, catastrophic medical expenses impoverish many households. In view of the
adverse consequences of ill health on overall economic development and
poverty reduction, we strongly urge the middle-income countries to undertake fiscal and organizational reforms to ensure universal coverage for priority health interventions.6 We also believe that the World Bank and the
regional development banks, through nonconcessional financing, can help
these countries to make a multi-year transition to universal coverage for
essential health services.
The Commission examined the evidence relating to organizational
requirements for scaling up and some of the key constraints that will have
to be overcome. Fortunately, the essential interventions highlighted here
Executive Summary
are generally not technically exacting. Few require hospitals. Most can be
delivered at health centers, at smaller facilities that we refer to as health
posts, or through outreach services from these facilities. We call these collectively the close-to-client (CTC) system, and this system should be given
priority to make these interventions widely accessible. Producing an effective CTC system is no small task. National leadership, coupled with
capacity and accountability at the local level, is vital. This will require new
political commitments, increased organizational and supervisory capacity
at both local and higher levels, and greater transparency in public services and budgetingall backed by more funding. These, in turn, must be
built on a foundation of strong community-level oversight and action, in
order to be responsive to the poor, in order to build accountability of local
services, and in order to help ensure that families take full advantage of
the services provided.
Some recent global initiatives for disease control, including those for
TB, leprosy, guinea-worm disease, and Chagas disease, have proved highly successful in delivering quality interventions and, in some cases, changing attitudes and behaviors in some very difficult situations over large geographical areas. An important feature of these initiatives is the inclusion
of rigorous systems of monitoring, evaluation, reporting, and financial
control as mechanisms for ensuring that objectives are met, problems are
detected and corrected, and resources are fully accountable. The result is
a growing body of evidence concerning both the degree of progress
achieved and the operational and managerial strategies that contribute to
success. Lessons from these experiences can provide useful operational
guidance, especially for the delivery of interventions at the close-to-client
level.
In most countries, the CTC system would involve a mix of state and
nonstate health service providers, with financing guaranteed by the state.
The government may directly own and operate service units, or may contract for services with for-profit and not-for-profit providers. Since public
health systems in poor countries have been so weak and underfinanced in
recent years, a considerable nongovernmental health sector has arisen that
is built upon private practice, religiously affiliated providers, and nongovernmental organizations. This variety of providers is useful in order to
provide competition and a safety valve in case of failure of the public system. It is also a fait accompli in almost all poor countries.
A sound global strategy for health will also invest in new knowledge.
One critical area of knowledge investment is operational research regard-
ing treatment protocols in low-income countries.7 There is still much to be

learned about what actually works, and why or why not, in many lowincome settings, especially where interventions have not been used or documented to date. Even when the basic technologies of disease control are
clear and universally applicable, each local setting poses special problems
of logistics, adherence, dosage, delivery, and drug formulation that must
be uncovered through operational research at the local level. We recommend that as a normal matter, country-specific projects should allocate at
least 5 percent of all resources to project-related operational research in
order to examine efficacy, the optimization of treatment protocols, the
economics of alternative interventions, and delivery modes and population/patient preferences.
There is also an urgent need for investments in new and improved
technologies to fight the killer diseases. Recent advances in genomics, for
example, bring us much closer to the long-sought vaccines for malaria and
HIV/AIDS, and lifetime protection against TB. The science remains complex, however, and the outcomes unsure. The evidence suggests high social
returns to investments in research that are far beyond current levels.
Whether or not effective vaccines are produced, new drugs will certainly
be needed, given the relentless increase of drug-resistant strains of disease
agents. The Commission therefore calls for a significant scaling up of
financing for global R&D on the heavy disease burdens of the poor. We
draw particular attention to the diseases overwhelmingly concentrated in
poor countries. For these diseases, the rich-country markets offer little
incentive for R&D to cover the relatively few cases that occur in these rich
countries.8 We also stress the need for research into reproductive health
for example, new microbicides that could block the transmission of
HIV/AIDS and improved management of life-threatening obstetric conditions.
We need increased investments in other areas of knowledge as well.
Basic and applied scientific research in the biomedical and health sciences
in the low-income countries needs to be augmented, in conjunction with
increased R&D aimed at specific diseases. The state of epidemiological
knowledgewho suffers and dies and of which diseasesmust be greatly
enhanced, through improved surveillance and reporting systems.9 In public health, such knowledge is among the most important tools available to
successful disease control. Surveillance is also critically needed in the case
of many NCDs, including mental health, the impact of violence and accidents, and the rapid rise of tobacco and diet/nutrition-related diseases.
Executive Summary
Finally, we need a greatly enhanced system of advising and training

throughout the low-income countries, so that the lessons of experience in
one country can be mobilized elsewhere. The international diffusion of
new knowledge and best practices is one of the key forces of scaling up,
a central responsibility of organizations such as the World Health
Organization and the World Bank, and a goal now more readily achieved
through low-cost methods available through the internet.
A war against disease requires not only financial resources, sufficient
technology, and political commitment, but also a strategy, operational
lines of responsibility, and the capacity to learn along the way. The
Commission therefore devoted substantial effort to analyzing the organizational practicalities of a massive, donor-supported scaling up of health
interventions in the low-income world. We started by noting the changes
that will be needed on the ground within the countries themselves. After
all, essential health interventions are delivered in the communities where
poor people live. Scaling up must therefore start with the organization of
the CTC delivery system at the local level. The role of community
involvement, and more generally of mobilization of a broad partnership
of public and private sectors and civil society, is crucial here. The CTC system should also be supported by nationwide programs for some major diseases, such as malaria, HIV/AIDS, and TB. Such focused programs have
important advantages when properly integrated with community health
delivery, by mobilizing communities of expertise not available at the community level, public attention and financing, political energies, and public
accountability for specified results.
Since scaling up will require a significant increase in international
financing, an effective partnership of donors and recipient countries,
based on mutual trust and performance, is essential. In this context, the
mechanisms of donor financing must change, a point that has been recognized in the international system in the past 3 years by the creative introduction of a new framework for poverty reduction, often termed the
Poverty Reduction Strategy Paper (PRSP) framework.10 The early results
of the PRSP process to date are promising, and the Commission endorses
this new process.11 A concerted attack on disease along the lines that we
recommend will help to ensure success of this emerging approach to
donorrecipient relations. The strengths of the PRSP include: (1) deeper
debt cancellation, (2) country leadership in the preparation of the national strategy, (3) explicit incorporation of civil society at each step of the
process, (4) a comprehensive approach to poverty reduction, and (5) more
10
donor coordination in support of country goals. All of these are applicableindeed vitalto the success of the health initiative proposed here. To
achieve the potential benefits of the PRSP framework, donor and recipient
countries must specify a sustainable financing scheme and investment plan
for the health sector as an integral part of the PRSP scheme for health.
Though we advocate a greatly increased investment in the health sector itself, we stress the need for complementary additional investments in
areas with an important impact on poverty alleviation (including effects
on health). These include education, water and sanitation, and agricultural improvement. For example, education is a key determinant of health
status, as health is of education status. Investments in these various sectors
work best when made in combination, a point highlighted by the PRSP
process. We did not, however, make cost estimates outside of the health
sector.12
Within the context of the PRSP, the Commission recommends that
each developing country establish a temporary National Commission on
Macroeconomics and Health (NCMH), or its equivalent, chaired jointly
by the Ministers of Health and Finance and incorporating key representatives of civil society, to organize and lead the task of scaling up.13 Each
NCMH would assess national health priorities, establish a multi-year
strategy to extend coverage of essential health services, take account of
synergies with other key health producing sectors, and ensure consistency
with a sound macroeconomic policy framework. The plan would be predicated upon greatly expanded international grant assistance. The National
Commissions would work together with the WHO and World Bank to
prepare an epidemiological baseline, quantified operational targets, and a
medium-term financing plan. Each Commission should complete its work
within two years, by the end of 2003.
We recommend that each country will need to define an overall program of essential interventions to be guaranteed universal coverage
through public (plus donor) financing. We suggest four main criteria in
choosing these essential interventions: (1) they should be technically efficacious and can be delivered successfully; (2) the targeted diseases should
impose a heavy burden on society, taking into account individual illness as
well as social spillovers (such as epidemics and adverse economic effects);
(3) social benefits should exceed costs of the interventions (with benefits
including life-years saved and spillovers such as fewer orphans or faster
economic growth); and (4) the needs of the poor should be stressed.
Executive Summary
11
We estimate that by 2010 around 8 million lives per year, in principle, could be savedmainly in the low-income countriesby the essential
interventions against infectious diseases and nutritional deficiencies recommended here.14 The CMH estimated the costs of this expanded coverage,15 including related general costs of system expansion and supervision,
for all countries with 1999 GNP per capita below $1,200, plus the
remaining handful of countries in sub-Saharan Africa with incomes above
$1,200 (see Table A2.B for the list of countries).16 Total annual health outlays for this group of countries would rise by $57 billion by 2007 and by
$94 billion by 2015 (Table A2.3). The countries in the aggregate would
commit an additional $35 billion per year by 2007 and $63 billion per
year by 2015.17 The donors, on their part, would contribute grant financing of an additional $22 billion per year by 2007 and $31 billion per year
by 2015 (Table A2.6).18 Current official development assistance (ODA) is
on the order of $6 billion.19 Total donor spending, including both country-level programs and the supply of global public goods, would be $27
billion in 2007 and $38 billion in 2015. The increased donor financing for
health would be additional to overall current aid flows, since aid should
be increased in many areas outside of the health sector as well.
Most of the donor assistance would be directed at the least-developed
countries, which need the most grant assistance to extend the coverage of
health services. For those countries, total annual health outlays would rise
by $17 billion by 2007 and $29 billion by 2015, above the level of 2002.
Given the extremely low incomes in these countries, domestic resource
mobilization would fall far short of need, however, rising by $4 billion by
2007 and $9 billion by 2015. The gap would be filled by donors, with
grant assistance equal to $14 billion per year in 2007 and $21 billion per
year in 2015. We also note that, on a regional basis, Africa would receive
the largest proportion of donor assistance, a reflection both of Africas
poverty and its high disease prevalence. AIDS prevention and care would
account for around half of the total cost of scaling up.20
To understand these sums, it is instructive to consider the costs of the
health interventions on a per capita basis. We find that, on average, the set
of essential interventions costs around $34 per person per year, a very
modest sum indeed, especially compared with average per capita health
spending in the high-income countries of more than $2,000 per year. The
least developed countries can mobilize around $15 per person per year by
2007 (almost 5 percent of per capita income). The gap is therefore $19 per
person per year. With 750 million people in the least-developed countries
12
in 2007, that comes to around $14 billion. The other low-income countries can mobilize around $32 per person on average (again roughly 5 percent of per capita income). Some of these countries will need donor aid to
reach the $34 per person requirement, and others will not. The other lowincome countries will have a combined population of around 2 billion in
2007, and when calculated on a country-by-country basis will need roughly $3 per capita on average to close the financing gap, therefore requiring
a total level of donor aid of approximately $6 billion. The low-middleincome countries will need an additional $1.5 billion, mainly to cover the
high costs of AIDS.
It is important to put the total donor assistance into perspective.
Although the required assistance is large relative to current donor assistance in health, it would be only around 0.1 percent of donor GNP, and
would leave ample room for significant increases in other areas of donor
assistance as needed. We stress that the increased aid for health must be
additional to current aid flows, since indeed increased aid will be needed
not only in health but also in education, sanitation, water supply, and
other areas. Also, although the donor flows look large in relation to current health spending, particularly in the poorest countries, this reflects
how little they spend, which in turn reflects their low incomes. This
expansion of aid to the health sector needs to be phased over time to
ensure that resources are used effectively and honestly, which led us to the
time path of increasing coverage shown in Table 7, which shows the basis
of our costing. Note that the donor assistance will be required for a sustained period of time, perhaps 20 years, but will eventually phase out as
countries achieve higher per capita incomes and are thereby increasingly
able to cover essential health services out of their own resources.
This program would yield economic benefits vastly greater than its
costs. Eight million lives saved from infectious diseases and nutritional
deficiencies would translate into a far larger number of years of life saved
for those affected, as well as a higher quality of life. Economists talk of
disability-adjusted life years (DALYs) saved,21 which add together the
increased years of life and the reduced years of living with disabilities. We
estimate that approximately 330 million DALYs would be saved for each
8 million deaths prevented. Assuming, conservatively, that each DALY
saved gives an economic benefit of 1 years per capita income of a projected $563 in 2015, the direct economic benefit of saving 330 million
DALYs would be $186 billion per year, and plausibly several times
that.22 Economic growth would also accelerate, and thereby the saved
Executive Summary
13
DALYs would help to break the poverty trap that has blocked economic
growth in high-mortality low-income countries. This would add tens or
hundreds of billions of dollars more per year through increased per capita incomes.
The $27 billion of total grant assistance in 2007 would be devoted to
three goals: (1) assistance to low-income countries (and to a few middleincome countries for HIV/AIDS-related expenditures) to help pay for the
scaling up of essential interventions and health system development ($22
billion, detailed in Appendix 2); (2) investments in research and development (R&D) devoted to the diseases of the poor ($3 billion); and (3)
increased delivery of global public goods by the international institutions
charged with coordinating the global effort, including the World Health
Organization, the World Bank, and other specialized United Nations
agencies ($2 billion). There would also be additional nonconcessional loan
assistance for middle-income countries.23 We believe that if well managed
and phased in along the timetable that we recommend, these requisite
flows could be absorbed by the developing countries without undue
macroeconomic or sectoral destabilization.
These financial targets are a vision of what should be done, rather
than a prediction of what will happen. We are all too aware of donor
countries that neglect their international obligations despite vast wealth,
and of recipient countries that abjure the governance needed to save their
own people. Maybe little increased funding will take place; donors might
give millions when billions are needed, and impoverished countries will
fight wars against people rather than disease, making it impossible for the
world community to help. We are not nave: it is no accident that millions
of peoplevoiceless, powerless, unnoticed by the mediadie unnecessarily every year.24
The delivery of such large donor financing will require a new modus
operandi. The Commission strongly supports the establishment of the
Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM), which
initially will focus on the global response to AIDS, malaria, and TB. We
recommend that the GFATM be scaled up to around $8 billion per year
by 2007 as part of the overall $22 billion of donor aid to country programs. Given the unique challenge posed by AIDS and its capacity to overturn economic development in Africa and other regions for decades, we
believe that the GFATM should support a bold and aggressive program
that focuses on prevention of new infections together with treatment for
those already infected. Prevention efforts would aim at achieving a high
14
coverage of prevention programs for highly vulnerable groups including

commercial sex workers and injection drug users, and achieving widespread access to treatment of sexually transmitted infections (STIs), voluntary counseling and testing (VCT), and interventions to interrupt mother-to-child transmission. Given the costs and challenges of scaling up treatment, especially using antiretroviral therapy (ART) effectively and without
promoting viral resistance to the drugs, scaling up should be carefully
monitored, science-based, and subject to intensive operational research.
We endorse the estimates of UNAIDS and WHOs ART program that 5
million people can be brought under antiretroviral treatment in lowincome settings by the end of 2006.25
To help channel the increased R&D outlays, we endorse the establishment of a new Global Health Research Fund (GHRF), with disbursements of around $1.5 billion per year. This fund would support basic and
applied biomedical and health sciences research on the health problems
affecting the worlds poor and on the health systems and policies needed
to address them. Another $1.5 billion per year of R&D support should be
funded through existing channels. These include the Special Programme
for Research and Training in Tropical Diseases (TDR), the Initiative for
Vaccine Research (IVR), the Special Programme of Research, Development and Research Training in Human Reproduction (HRP) (all housed
at WHO) and the public-private partnerships for AIDS, TB, malaria, and
other disease control programs that have recently been established. In
both cases, the predictability of increased funding would be vital, as the
necessary R&D undertakings are long-term ventures. The existing Global
Forum for Health Research could play an important role in the effective
allocation of this overall assistance. To support this increased research and
development, we strongly advocate the free internet-based dissemination
of leading scientific journals, thereby increasing the access of scientists in
the low-income countries to a vital scientific research tool.
The public sector cannot bear this burden on its own. The pharmaceutical industry must be a partner in this effort. The corporate principles
that have spurred recent and highly laudable programs of drug donations
and price discounts need to be generalized to support the scaling up of
health interventions in the poor countries. The pharmaceutical industry
needs to ensure that low-income countries (and the donors on their behalf)
have access to essential medicines at near-production cost (sometimes
termed the lowest viable commercial price) rather than the much higher
prices that are typical of high-income markets. Industry is ready, in our
Executive Summary
15
estimation, for such a commitment, enabling access of the poor to essential medicines, both through differential pricing and licensing their products to generics producers.26 If industry cooperation is not enough or not
forthcoming on a general and reliable basis, the rules of international
trade involving access to essential medicines should be applied in a manner that ensures the same results. At the same time, it is vital to ensure that
increased access for the poor does not undermine the stimulus to future
innovation that derives from the system of intellectual property rights.
Private industry outside of the pharmaceutical sector also has a role to
play, including by ensuring that their own labor forcethe heart of a
firms productivityhas access to the knowledge and medical services that
ensure their survival and health. For example, the mining companies of
southern Africa, at the epicenter of HIV/AIDS, have a special responsibility to help prevent transmission and to work with government and donors
to ensure that their workers have access to care. The main findings of the
Commission regarding the links of health and development are summarized in Table 2. An action agenda is summarized in Table 3. Our specific
recommendations on increased international donor assistance and domestic financing are summarized in Table 4.
With globalization on trial as never before, the world must succeed in
achieving its solemn commitments to reduce poverty and improve health.
The resourceshuman, scientific, and financialexist to succeed, but
now must be mobilized. As the world embarks on a heightened struggle
against the evils of terrorism, it is all the more important that the world
simultaneously commit itself to sustaining millions of lives through peaceful means as well, using the best of our modern science and technology
and the enormous wealth of the rich countries. This would be an effort
that would inspire and unite peoples all over the world. We call upon the
leaders of the international communityin donor and recipient nations,
in international institutions such as the World Bank, the World Health
Organization, the World Trade Organization, the Organisation for
Economic Co-operation and Development, and the International
Monetary Fund, in private enterprise, and in civil societyto seize the
opportunities identified in this report. Now, united, the world can initiate
and facilitate the global investments in health that can transform the lives
and livelihoods of the worlds poor.
16
Table 2. Key Findings on the Linkages of Health and Development

1. Health is a priority goal in its own right, as well as a central input into economic
development and poverty reduction. The importance of investing in health has been
greatly underestimated, not only by analysts but also by developing-country governments and the international donor community. Increased investments in health as outlined in this Report would translate into hundreds of billions of dollars per year of
increased income in the low-income countries. There are large social benefits to ensuring high levels of health coverage of the poor, including spillovers to wealthier members of the society.
2. A few health conditions are responsible for a high proportion of the health deficit:
HIV/AIDS, malaria, TB, childhood infectious diseases (many of which are preventable
by vaccination), maternal and perinatal conditions, tobacco-related illnesses, and
micronutrient deficiencies. Effective interventions exist to prevent and treat these conditions. Around 8 million deaths per year from these conditions could be averted by
the end of the decade in a well-focused program.
3. The HIV/AIDS pandemic is a distinct and unparalleled catastrophe in its human
dimension and its implications for economic development. It therefore requires special
consideration. Tried and tested interventions within the health sector are available to
address most of the causes of the health deficit, including HIV/AIDS.
4. Investments in reproductive health, including family planning and access to contraceptives, are crucial accompaniments of investments in disease control. The combination
of disease control and reproductive health is likely to translate into reduced fertility,
greater investments in the health and education of each child, and reduced population
growth.
5. The level of health spending in the low-income countries is insufficient to address the
health challenges they face. We estimate that minimum financing needs to be around
$30 to $40 per person per year to cover essential interventions, including those needed to fight the AIDS pandemic, with much of that sum requiring budgetary rather
than private-sector financing. Actual health spending is considerably lower. The leastdeveloped countries average approximately $13 per person per year in total health
expenditures, of which budgetary outlays are just $7. The other low-income countries
average approximately $24 per capita per year, of which budgetary outlays are $13.
6. Poor countries can increase the domestic resources that they mobilize for the health
sector and use those resources more efficiently. Even with more efficient allocation
and greater resource mobilization, the levels of funding necessary to cover essential
services are far beyond the financial means of many low-income countries, as well as
a few middle-income countries with high prevalence of HIV/AIDS.
7. Donor finance will be needed to close the financing gap, in conjunction with best
efforts by the recipient countries themselves. We estimate that a worldwide scaling up
of health investments for the low-income countries to provide the essential interventions of $30 to 40 per person will require approximately $27 billion per year in donor
grants by 2007, compared with around $6 billion per year that is currently provided.
This funding should be additional to other donor financing, since increased aid is also
needed in other related areas such as education, water, and sanitation.
Executive Summary
17
8. Increased health coverage of the poor would require greater financial investments in
specific health sector interventions, as well as a properly structured health delivery
system that can reach the poor. The highest priority is to create a service delivery system at the local (close-to-client) level, complemented by nationwide programs for
some major diseases. Successful implementation of such a program requires political
and administrative commitment, strengthening of country technical and administrative
expertise, substantial strengthening of public management systems, and creation of
systems of community accountability. It also requires new approaches to donor/recipient relations.
9. An effective assault on diseases of the poor will also require substantial investments in
global public goods, including increased collection and analysis of epidemiological
data, surveillance of infectious diseases, and research and development into diseases
that are concentrated in poor countries (often, though not exclusively, tropical diseases).
10 Coordinated actions by the pharmaceutical industry, governments of low-income
countries, donors, and international agencies are needed to ensure that the worlds
low-income countries have reliable access to essential medicines.
18
Table 3. An Action Agenda for Investing in Health for
1. Each low- and middle-income country should establish a temporary National
Commission on Macroeconomics and Health (NCMH), or its equivalent, to formulate
a long-term program for scaling up essential health interventions as part of their overall framework in their Poverty Reduction Strategy Paper (PRSP). The WHO and the
World Bank should assist national Commissions to establish epidemiological baselines, operational targets, and a framework for long-term donor financing. The
NCMHs should complete their work by the end of 2003.
2. The financing strategy should envisage an increase of domestic budgetary resources
for health of 1 percent of GNP by 2007 and 2 percent of GNP by 2015 (or less, if a
smaller increase is sufficient to cover the costs of scaling up, as may be true in some
middle-income countries). For low-income countries, this entails an additional budgetary outlay of $23 billion by 2007 and $40 billion by 2015, of which the least-developed countries account for $4 billion by 2007 and $9 billion by 2015 themselves, and
the other low-income countries the balance. Countries should also take steps to
enhance the efficiency of domestic resource spending, including a better prioritization
of health services and the encouragement of community-financing schemes to ensure
improved risk pooling for poor households.
3. The international donor community should commit adequate grant resources for lowincome countries to ensure universal coverage of essential interventions as well as
scaled-up R&D and other public goods. A few middle-income countries will also
require grant assistance to meet the financial costs of expanded HIV/AIDS control.
According to our estimates, total needs for donor grants will be $27 billion per year
in 2007 and $38 billion per year in 2015. In addition, the World Bank and the regional development banks should offer increased nonconcessional loans to middle-income
countries aiming to upgrade their health systems. The allocation of donor commitments would be roughly as follows:
2007
Country-level programs
R&D for diseases of the poor
Provision of other Global Public Goods
Total
2015
$22 billion
$31 billion
$3 billion
$4 billion
$2 billion
$3 billion
$27 billion
$38 billion
The WHO and the World Bank, with a steering committee of donor and recipient
countries, should be charged with coordinating and monitoring the resource mobilization process. Implementing this vision of greatly expanded support for health requires
donor support for build-up of implementation capacity and for addressing governance
or other constraints. Where funds are not used appropriately, however, credibility
requires that funding be cut back and used to support capacity building and NGO
programs.
Executive Summary
19
4. The international community should establish two new funding mechanisms, with the
following approximate scale of annual outlays by 2007: The Global Fund to Fight
AIDS, Tuberculosis, and Malaria (GFATM), $8 billion; and the Global Health
Research Fund (GHRF), $1.5 billion. Additional R&D outlays of $1.5 billion per year
should be channeled through existing institutions such as TDR, IVR, and HRP at
WHO, as well as the Global Forum for Health Research and various public-private
partnerships that are currently aiming toward new drug and vaccine development.
Country programs should also direct at least 5 percent of outlays to operational
research.
5. The supply of other Global Public Goods (GPGs) should be bolstered through additional financing of relevant international agencies such as the World Health
Organization and World Bank by $1 billion per year as of 2007 and $2 billion per
year as of 2015. These GPGs include disease surveillance at the international level,
data collection and analysis of global health trends (such as burden of disease), analysis and dissemination of international best practices in disease control and health systems, and technical assistance and training.
6. To support private-sector incentives for late-stage drug development, existing orphan
drug legislation in the high-income countries should be modified to cover diseases of
the poor such as the tropical vector-borne diseases. In addition, the GFATM and other
donor purchasing entities should establish pre-commitments to purchase new targeted
products at commercially viable prices.
7. The international pharmaceutical industry, in cooperation with low-income countries
and the WHO, should ensure access of the low-income countries to essential medicines through commitments to provide essential medicines at the lowest viable commercial price in the low-income countries, and to license the production of essential
medicines to generics producers as warranted by cost and/or supply conditions, as discussed in detail in the Report.
8. The WTO member governments should ensure sufficient safeguards for the developing countries, and in particular the right of countries that do not produce the relevant
pharmaceutical products to invoke compulsory licensing for imports from third-country generics suppliers.
9. The International Monetary Fund and World Bank should work with recipient countries to incorporate the scaling up of health and other poverty-reduction programs
into a viable macroeconomic framework.
20
Table 4. Recommended Donor and Country Commitments

(billions of constant 2002 US dollars)
2001 (CMH estimates)
2007
2015
Donor Commitments
Country-level programs:
Least-Developed Countries
$1.5
$14
$21
Other-Low-Income Countries
$2.0
$6
$8
Middle-Income Countries
$1.5 ODA
0.5 Nonconcessional
$2
$2
$0
$8
$12
$3
$4
of which: Global Fund to Fight

AIDS, Tuberculosis, and Malaria
Global Public Goods
R&D
of which: Global Health
Research Fund
(<) $0.5
$1.5
$2.5
International Agencies
$1
$2
$3
Total Donor Commitments
$7
$27
$38
$7
$11
$16
$43
$62
$74
$93
$119
Domestic Resources for Health

Other Low-Income Countries
Country-Level Programs in Low-Income Countries

Donor Commitments plus
Domestic Resources
$53.5
Note: Recommendations are for annual commitments in a global scaled up program. As

stressed throughout the Report, actual disbursements will depend on policy performance
within recipient countries.
The Commission Report
The world community has within its power the capacity to save the lives
of millions of people every year and to bolster economic development in
the worlds poorest countries. This Report describes a strategy for achieving those goals by expanding investments in the health of the worlds poor.
Our conclusions are substantiated by extensive research and consultations
undertaken during the past 2 years, especially by the work of six Working
Groups, which in total produced 87 background studies and six synthesis
monographs to be published by the World Health Organization.27 The
hundreds of participants that joined in this analytical process are listed in
Appendix 1 of this Report.
Evidence on Health and Development

The importance of health in its own right cannot be overstressed. In the
words of Nobel Laureate Amartya Sen, health (like education) is among
the basic capabilities that gives value to human life.28 In a global survey
commissioned for the Millennium Summit of the United Nations by UN
Secretary General Kofi Annan (Millennium Poll, United Nations 2000),
good health consistently ranked as the number one desire of men and
women around the world. The anguish of disease and premature death
makes disease control a central preoccupation of all societies, and motivates the inclusion of health among the basic human rights enshrined in
international law.29 The wisdom of every culture also teaches that health
is wealth in a more instrumental sense as well.30 For individuals and families, health brings the capacity for personal development and economic
security in the future. Health is the basis for job productivity, the capacity to learn in school, and the capability to grow intellectually, physically,
and emotionally. In economic terms, health and education are the two
cornerstones of human capital, which Nobel Laureates Theodore Shultz
and Gary Becker have demonstrated to be the basis of an individuals economic productivity. As with the economic well-being of individual households, good population health is a critical input into poverty reduction,
economic growth, and long-term economic development at the scale of
whole societies.31 This point is widely acknowledged by analysts and policy makers, but is greatly underestimated in its qualitative and quantita-
22
tive significance, and in the investment allocations of many developingcountry and donor governments.32 Societies with a heavy burden of disease tend to experience a multiplicity of severe impediments to economic
progress. Conversely, several of the great takeoffs in economic history
such as the rapid growth of Britain during the Industrial Revolution; the
takeoff of the US South in the early 20th century; the rapid growth of
Japan in the early 20th century; and the dynamic development of southern
Europe and East Asia beginning in the 1950s and 1960swere supported
by important breakthroughs in public health, disease control, and
improved nutritional intake (which, in addition to improving energy levels and productivity of workers, also reduced the vulnerability to infectious disease). The most impressive account of these historical trends
comes from the work of Professor Robert Fogel, whose seminal studies
have elucidated the relationship between body size and food supply and
shown it to be critical for long-term labor productivity (Fogel 1991; 1997;
2000). The secular declines in mortality that have been observed over the
past 200 years in Europe have been importantly boosted by the increased
availability of calories in the diet, as well as by advances in public health
and medical technologies. Fogel states The increase in the amount of
calories available for work over the past 200 years must have made a nontrivial contribution to the growth rate of the per capita income of countries such as France and Great Britain.33
The economic costs of avoidable disease, when taken together, are
staggeringly high. Disease reduces annual incomes of society, the lifetime
incomes of individuals, and prospects for economic growth. The losses are
dozens of percent of GNP of the poorest countries each year, which translates into hundreds of billions of US dollars. The Commission found that
within the developing countries, the communicable diseases, maternal
mortality, and undernutrition hit the poor much harder than they hit the
rich, though all income classes are affected. A substantial amount of
research at the World Bank (Gwatkin 2000; Gwatkin et al. 2001) documents the vast divide in health status of the relatively high- and lowincome groups within a society. For example, mortality rates among the
poorest quintile of children in Bolivia and Turkey were found to be as
much as four times higher than among the richest quintile.34 Many other
indicators of health outcomes and access to health services showed similar gaps around the world. Moreover, an episode of illness may reduce a
poor household to penury, especially when they have to sell their productive assets in order to cover health care outlays. A concerted attack against
23
these diseases, therefore, inherently constitutes a poverty-reduction effort

in which the benefits will accrue disproportionately to the poor.
Investments in health therefore merit a special pride of place within the
strategies for poverty reduction now underway in many low-income countries.
There are many reasons for the increased burden of disease on the
poor. First, the poor are much more susceptible to disease because of lack
of access to clean water and sanitation, safe housing, medical care, information about preventative behaviors, and adequate nutrition. Second, the
poor are much less likely to seek medical care even when it is urgently
needed, because of their greater distance from health providers, their lack
of out-of-pocket resources needed to cover health outlays, and their lack
of knowledge of how best to respond to an episode of illness. Third, as
mentioned, out-of-pocket outlays for serious illness can push them into a
poverty trap from which they do not recover, by forcing them into debt or
into the sale or mortgaging of productive assets (such as land). A serious
illness may plunge a household into prolonged impoverishment, extending
even to the next generation as children are forced from school and into the
workforce.
The macroeconomic evidence confirms that countries with the weakest conditions of health and education have a much harder time achieving
sustained growth than do countries with better conditions of health and
education. In Table 5, we show the growth rates of several dozen developing countries during the period 1965 to 1994, grouping the countries
according to their initial income levels in 1965 and their rates of infant
mortality in the same year (as a proxy for overall disease conditions). The
Table 5. Growth Rate of Per Capita Income, 19651994 (according to income and
infant mortality rate, 1965)
Initial Infant Mortality Rate, 1965
IMR 50
50 < IMR
100
100 < IMR

150
IMR > 150
1.0
0.1
3.4
1.1
0.7
1.8
1.1
2.5
Initial Income, 1965

(PPP-adjusted 1990 US dollars)
GDP $750
$750 < GDP $1,500
3.7
$1,500 < GDP $3,000
5.9
$3,000 < GDP $6,000
2.8
1.7
GDP > $6,000
1.9
0.5
0.3
Note: The reported growth rate is the simple average of the GDP growth rates of all countries
in the specific cell.
24
table shows that for any given initial income interval, countries with lower
infant mortality rates experienced higher economic growth during the
period. For example, in the poorest grouping (less than $750 per person
per year in purchasing-power-parity-adjusted 1990 US dollars), countries
with an infant mortality rate (IMR) between 50 and 100 per 1,000 live
births enjoyed annual average growth of 3.7 percent per year, whereas
similarly poor countries with an IMR greater than 150 had average
growth of only 0.1 percent per year.35
The correlation between better health and higher economic growth
holds up even when additional economic variables are introduced to try to
account for the cross-country patterns of growth (as in the work of Barro
and Sala-i-Martin 1995; Bloom and Sachs 1998; Bhargava et al. 2001).
Standard macroeconomic analyses of cross-country growth are based on
a model in which economic growth during an interval of time is a function of initial income (because of conditional convergence), economic policy variables, and other structural characteristics of the economy, including indicators of population health. A typical statistical estimate suggests
that each 10 percent improvement in life expectancy at birth (LEB) is
associated with a rise in economic growth of at least 0.3 to 0.4 percentage
points per year, holding other growth factors constant. The difference in
annual growth, therefore, accounted for by LEB between a typical highincome country (LEB = 77 years) and a typical least-developed country
(LEB = 49 years) is about 1.6 percentage points per year, which cumulates
to enormous effects over time.36 In short, health status seems to explain
an important part of the difference in economic growth rates, even after
controlling for standard macroeconomic variables. In todays world, poor
health has particularly pernicious effects on economic development in subSaharan Africa, South Asia, and pockets of high disease and intense poverty elsewhere. Sub-Saharan Africa has experienced a chronic decline of living standards during the past generation, starting from the lowest base in
the world. The heavy burden of disease, and its multiple effects on productivity, demography, and education, have certainly played a role in
Africas chronic poor performance. A recent econometric study (Bloom
and Sachs 1998) found that more than half of Africas growth shortfall
relative to the high-growth countries of East Asia could be explained statistically by disease burden, demography, and geography, rather than by
more traditional variables of macroeconomic policy and political governance. High prevalence of diseases such as malaria and HIV/AIDS are
associated with persistent and large reductions of economic growth rates.
25
High malaria prevalence, for example, has been shown to be associated

with a reduction of economic growth of 1 percent per year or more.37
The gains in growth of per capita income as a result of improved
health are impressive, but tell only a part of the story. Even if per capita
economic growth were unaffected by health, there would still be important gains in economic well-being from increased longevity. When comparing well-being across societies, it is important to take account of life
expectancy as well as annual income. In healthier countries, individuals
live much longer on average, so their lifetime economic earnings are therefore much higher. Consider, for example, the differences in well-being
between an average resident of Botswana and of the United States. In
Botswana, the reported average annual income in 1997 was about $6,320
in purchasing power adjusted terms.38 In the United States, the average
income the same year was $30,000. At first glance, it would seem that the
US income was 5 times higher per person. But an average 22-year-old in
Botswana with 12 years of education has a lifetime expected income
around 61 times the annual average ($385,000), whereas a similarly educated 22-year-old American, because of a longer expected life span, has a
lifetime expected income of around 120 times the annual average
($3,600,000). Thus, in terms of (undiscounted) lifetime incomes rather
than annual incomes, the income gap is actually closer to 10 times. The
gap in psychological well-being (utility in the economists jargon) would
be even larger. Moreover, increased longevity has indirect impacts on economic well-being in addition to the direct effects of more years of earning
power, consumption, and leisure. Longer-lived households will tend to
invest a higher fraction of their incomes in education and financial saving,
because their longer time horizon allows them more years to reap the benefits of such investments.
Because disease weighs so heavily on economic development, investing in health is an important component of an overall development strategy. This is especially true in poor countries where the burden of disease
is very high. But investments in health work best as part of a sound overall development strategy. Economic growth requires not only healthy individuals but also education, and other complementary investments, an
appropriate division of labor between the public and private sectors, wellfunctioning markets, good governance, and institutional arrangements
that foster technological advance. Private sectorled growth in the business sector must be complemented by an active role of government in several areas: ensuring core investments in health and education, guarantee-
26
ing the rule of law, protecting the physical environment, and working in
cooperation with the private sector to foster scientific and technological
advance. We are not claiming that investments in health can solve development problems, but rather that investments in health should be a central part of an overall development and poverty reduction strategy.
We illustrate the position of health among the many contributors to
economic development in Figure 1. Economic output is shown to be a
function of policies and institutions (economic policies, governance, and
supply of public goods) on the one hand, and factor inputs (human capital, technology, and enterprise capital) on the other. Good policies and
institutions are critically important: they help to determine both economic performance for any given levels of capital and technology, and also the
pace at which capital and technology accumulate. Health has its most
important economic effects on human capital and on enterprise capital, as
Figure 1. Health as an Input into Economic Development
Economic Policies and Institutions

Governance
Provision of Public Goods
Human Capital, including:

education, on-the-job training,
physical and cognitive development
Health
Technology, including:
scientific knowledge relevant
for production
innovations in the domestic economy
diffusion of technology from abroad
Enterprise Capital, including:

fixed investments in plant and
equipment
teamwork and organization
of work force
investment opportunities
ability to attract labor and capital
Economic Development:
High Levels of GNP
per capita
Growth of GNP
per capita
Poverty Reduction
27
we discuss in the Report, through a variety of pathwayssome obvious

and others more subtle. Health itself is affected by the prevailing policies
and institutions, the level of human capital (since education, for example,
promotes health), the level of technology in the society, especially in the
health sector itself, and on the very growth in income and poverty reduction that better health engenders.
Economic development is therefore a multi-sectoral process, and the
strategy for economic development must build on a broad range of social
investments as well as strategies to encourage private-sector business
investment. For low-income countries, the emerging PRSP process provides a promising mechanism for incorporating the fight against disease
into a more comprehensive development strategy. The PRSP process
impels governments and civil society to look across a range of policies in
health, education, water and sanitation, environmental management, gender relations, and other areas. We applaud this comprehensive approach,
since even on the narrow question of health it is clear that good health and
the protection against disease cannot be produced by the health sector
alone. One of the most powerful contributors to reduced child mortality,
for example, is the literacy of mothers, which is itself the product of an
education system that ensures widespread access to education for the poor,
including girls as well as boys. Safe water and sanitation, backed by proper hygienic behavior such as hand washing and the use of soap, could dramatically reduce the incidence of many diarrheal and other diseases that
kill millions of children each year. And dietary intake interacts critically
with disease. Insufficient intake of total calories and proteins, often the
result of very low food productivity of peasant farm households, can leave
individuals immunosuppressed, making them vastly more vulnerable to
the onset and consequences of infectious disease. Micronutrient deficiencies can have devastating consequences for physical and cognitive development. Cultural norms, especially inequalities in relations between men
and women, can exacerbate disease conditions. A young girls vulnerability to AIDS may be little reduced through education about safe sexual
practices if the girl remains vulnerable to demands for sexual favors in
lopsided relationships with socially powerful men. For all of these reasons,
improvements in health should be considered within a comprehensive
poverty reduction framework.
Global commitments to improved health are featured in the
Millennium Development Goals (MDGs) agreed by the worlds heads of
government at the Millennium Summit in 2000.39 The MDGs focus on
28
poverty reduction in general and on several health goals in particular,

thereby rightly underscoring the linkages between overall poverty alleviation and investments in health.40 The MDG health targets include: (1) a
reduction in child mortality by two-thirds of the 1990 level by 2015; (2)
a reduction in maternal mortality ratios by three-fourths of the 1990 level
by 2015; and (3) the end of rising HIV/AIDS and other major disease
prevalence no later than 2015. Other recent international initiatives, such
as the Roll Back Malaria and Stop TB programs, have added additional
and more tightly specified targets for disease control in specific areas.41
The MDGs are partly an expression of humanitarian concern, but
they are also an investment in the well-being of the rich countries as well
as the poor. The evidence is stark: disease breeds instability in poor countries, which rebounds on the rich countries as well. A high infant mortality rate was recently found to be one of the main predictors of subsequent
state collapse (through coups, civil war, and other unconstitutional
changes in regime) in a study of state failure over the period 1960 to
1994.42 The United States ended up intervening militarily in many of those
crises.43 In line with this thinking, intelligence studies have stressed the
strategic significance of controlling worldwide infectious diseases, including AIDS.44 Of course, the spillovers are even more than social and political instability in disease-impacted countries: communicable disease in one
locale can rapidly spread across international boundaries. AIDS itself is
the most dramatic example of a disease that originated in one location and
that quickly crossed national and continental boundaries to spread to the
rest of the world. The current best guess is that AIDS originated in western Africa around 1931, plus or minus 15 years.45 An influenza outbreak
of a newly mutated strain could be the next example of a worldwide killer,
where early detection and case management could save a huge number of
lives in rich and poor countries alike.46 Multi-drug resistant tuberculosis
(MDR-TB) is similarly crossing borders from poor to rich countries.47
Within societies, diseases that afflict the poor adversely affect the rich
as wellthrough the spread of infections and the broader destabilization
of society. A striking example involves the effectiveness of insecticidetreated mosquito nets (ITNs) in the control of malaria. Experimental data
show that the effectiveness of ITNs is enhanced by a high level of utilization of ITNs within a village, so that an individual bednet user is more
protected if others are also using nets.48 This is because ITNs work not
only by stopping the bites of mosquitoes through the net, but also (or even
mainly) by reducing the subsequent infectivity of mosquitoes that come
29
into contact with the insecticide on the net, thereby reducing the incidence
of malaria through the village. An ITN user may still get bitten, but the
biting mosquito is much less likely to be infective if others in the village
are also using ITNs. Thus, the rich members of a village have a direct stake
in the use of ITNs by the poor households as well. Similar examples of
such spillovers or mass effects abound in infectious disease control.
For example, untreated cases of TB among the poor are likely to spread,
and poorly treated cases are likely to develop multi-drug resistant TB,
with dire consequences for the rest of society.
A final example: the higher is the proportion of immunization coverage in the society, the higher is the probability that the nonimmunized will
be protected as well from epidemic transmission of the disease, a phenomenon known as herd immunity. The positive spillovers of immunization are clearest in the case of complete eradication of a disease, such as
the triumph over smallpox. Today the world saves hundreds of millions of
dollars each year on routine smallpox immunization programs, which are
no longer necessary now that the disease has been eradicated. To achieve
these savings, every case of smallpox had to be eliminated, which in turn
depended on mass immunization of the poorest of the poor, which in turn
required investments by the richer countries. The evidence developed by
the Commission, consistent with many other studies, suggests that that the
Millennium Development Goals for poverty reduction and health will not
be met without a concerted effort aimed at extending health interventions
to the worlds poor. Dozens of countries are off track now regarding child
mortality, maternal mortality, and curbing the major epidemic diseases.
According to the United Nations Development Program (2001), 62 percent of the population of developing countries are in nations that are lagging, far behind, or slipping in meeting the infant and child mortality
goals.49 Health systems in poor countries are not yet up to the task of
meeting the MDGs, and donor support remains grossly insufficient. The
world has made solemn pledges to address the crises of disease of the poor,
but has not yet taken strong enough practical steps to implement them.
With millions dying unnecessary and tragic deaths, and with global institutions under stress, a scaled-up war against disease is vital for the legitimacy of globalization.
30
Channels of Influence from Disease to

There are three main ways that disease impedes economic well-being and
development.50 The first channel already noted is the most direct: avoidable disease reduces the number of years of healthy life expectancy. The
economic losses to society of truncated livesdue to the combination of
early deaths and chronic disabilityare phenomenally large: hundreds of
billions of US dollars per year, representing a significant percentage of the
national incomes of the low-income countries. As a result of the AIDS
pandemic alone, aggregate economic growth will slow several percentage
points per year in Africa, as individuals in the prime of their working lives
are struck down. The second channel is the effect of disease on parental
investments in children. Societies with high rates of infant mortality
(deaths under 1 year of age) and child mortality (deaths under 5 years of
age) have higher rates of fertility, in part to compensate for the frequent
deaths of children. Large numbers of children, in turn, reduce the ability
of poor families to invest heavily in the health and education of each child,
a process described by Gary Becker and colleagues as the quality-quantity tradeoff in child rearing. The third channel is the depressing effects of
disease on the returns to business and infrastructure investment, beyond
the effects on individual worker productivity. Whole industries, in agriculture, mining, manufacturing, and tourism, as well as important infrastructure projects, are undermined by a high prevalence of disease. In
addition, epidemic and endemic diseases can also undermine social cooperation and even political and macroeconomic stability.
Direct Loss of Well-Being to the Individual
Individuals lose economic well-being as a result of disease. When economists and public health specialists try to account quantitatively for that
loss of well-being, they usually divide it into three parts: (1) the reduction
in market income caused by disease; (2) the reduction in longevity caused
by disease; and (3) the reduction in psychological well-being caused by
disease, often labeled pain and suffering, even when there is no reduction in market income or longevity.51 The reduction in market income, in
turn, has at least four sub-components: (i) the costs of medical treatment;
(ii) the loss of labor-market income from a episode of illness; (iii) the loss
of adult earning power from episodes of disease in childhood; and (iv) the
loss of future earnings from premature mortality.
31
One goal of economic analysis is to convert these disease-induced

losses into dollar terms, in order to assess the economic benefits that
would accrue to reducing the disease burden. The economics literature on
the value of life has a very strong and consistent conclusion: the value of
an extra year of healthy lifeas a result of successfully treating a disease,
for exampleis worth considerably more than the extra market income
that will be earned in the year. According to some estimates, each life year
is valued at around three times the annual earnings. This multiple of earnings reflects the value of leisure time in addition to market consumption,
the pure longevity effect, and the pain and suffering associated with disease. When an individual dies young, the economic losses are calculated as
the summation of losses associated with each year of lost life. According
to such calculations, a lost life at age 20 is sometimes taken to be equal to
100 times or more the annual earnings, since 40 or more years are lost,
and each lost year is worth about three times the annual earnings. Such
high valuations have been used in several recent economic analyses.52
Whatever the precise numbers, the calculations remind us of something important. When we assess the costs of a disease on society, we must
ask not only how the disease affects the level and growth of per capita
GNP (for example by reducing worker productivity), but also how the disease affects the lifespan and lifetime earnings lost by society. Even if the
AIDS pandemic has no effect on per capita GNP, its effect of reducing
longevity would still be devastating to economic well-being. With the
average life span in hard-hit countries cut short by years or decades, AIDS
is reducing lifetime earnings and economic well-being by a substantial
magnitude.
Let us illustrate the enormous costs of malaria and AIDS on African
well-being by using these concepts. We multiply the annual number of lost
life years due to each disease by some multiple of per capita income to get
a rough estimate of the aggregate economic loss. In sub-Saharan Africa,
for example, malaria accounted for an estimated 36 million disability
adjusted life years (DALYs) lost in 1999 out of a population of 616 million. If each DALY is valued very conservatively as equal to per capita
income, the total cost of malaria would be valued at 5.8 percent (= 36 /
616) of the gross national product of the region. If instead we value each
DALY at three times the per capita income, the total cost would be 17.4
percent of GNP (= 5.8 percent 3). Similarly, given an estimate of 72 million DALYs due to AIDS, and assuming each DALY is valued at the per
capita income, the economic value of lost life years in 1999 due to AIDS
32
would be 11.7 percent (= 72 / 616) of the gross national product of subSaharan Africa. If instead we value each DALY at three times the per capita income, the losses are an astounding 35.1 percent of GNP. Note that
each AIDS death is estimated to have resulted in 34.6 DALYs lost on average in 1999.53 This is because AIDS deaths tend to occur in young adults,
so that each death is associated with many life years lost between the age
of death and the benchmark of life expectancy.
Note that these cost estimates do not include the effects of disease on
the level of annual per capita income itself. Econometric estimates suggest
that in the short term, an economy in which the population is at zero risk
of malaria tends to grow more than 1 percentage point per year more rapidly than an economy with high malaria risk, controlling for other determinants of growth (such as income level, schooling, quality of institutions,
and fiscal policy). Since that growth effect cumulates over time, the econometric estimates suggest that the malarious economy ends up with a per
capita income that is roughly half the per capita income of the nonmalarious economy, again holding constant the other determinants of
growth.54 These effects on the level of per capita income can be combined
with the shorter life span due to malaria to give the overall effect of the
disease, which is clearly dozens of percent of GNP lost due to malaria.
Even if the precise estimates are open to considerable uncertainty, the
magnitude of the economic losses is clear.
The economic consequences of a disease episode on an individual
household can be magnified if the cost of dealing with the illness forces a
household to spend so much of its resources on medical care that it
depletes its assets and debts are incurred. This may throw a household
into poverty from which it cannot escape, and which has ramifications for
the welfare of all its members and often of relatives as well. The
Commission reviewed many studies showing how poor households are
rarely insured against catastrophic illness, and are therefore often required
to sell their few assets, such as farm implements and animals, or to mortgage their land, in order to maintain minimal consumption in the face of
lost market earnings and to pay for urgent medical care. This depletion of
productive assets can lead to a poverty trap (ie, persisting poverty) at the
household level even after the acute illness is overcome, since impoverished households will have a hard time re-capitalizing their productive
activities. The indebted household will lack the working capital to make
the short-term investments (e.g., in seed, fertilizer) to produce sufficient
output to pay off the debts, and will be unable to borrow against future
33
earnings. The poverty in turn may intensify the original disease conditions
as well.55
Life Cycle Consequences

Although most studies of the economic burden of disease look only at the
costs associated directly with an episode of illness (and with premature
mortality when applicable), nonfatal disease episodes early in life can have
adverse effects over the entire life cycle. Disease in infancy and in utero
can be associated with lifetime sequelae, including both cognitive and
physical infirmities.56 Education is widely recognized as a key to economic development, but many fail to appreciate how important childhood
health is for educational attainment. Poor health directly reduces cognitive
potential and indirectly undermines schooling through absenteeism, insufficient attention to lessons, and early dropouts.
The long-term consequences of early disease episodes are poorly elucidated but large. Some of the channels are biological: early disease
impedes physical and cognitive development, which in turn reduces adult
economic productivity. Some are economic as well, as when reduced cognitive capacity leads to premature school leaving, so that the individual
carries a lifetime dual burden of reduced cognitive capacity compounded
by a lack of educational attainment. Some ingenious indirect evidence suggests that the economic fallout from childhood disease and dietary insufficiency is enormous, much larger than typically believed. In many developing countries that have been studied, adult height is strongly and positively correlated with adult earnings (shown in Figure 2 in the case of
Figure 2. Brazil: Height and Wages
160
Source: Strauss and Thomas, 1998.
170
180
(cm)
190
34
Brazil). Adult height is itself a reflection of childhood nutrition and disease

experience. Children that suffer repeated bouts of infectious disease and
that receive insufficient nutrition in the diet are likely to reach adulthood
with reduced height. The correlation of height and earnings is therefore a
surprisingly strong indication of how childhood experience in health and
nutrition has lifetime consequences in economic productivity.
One of the most important effects of ill health is to hinder educational
attainment, both through effects on cognitive ability and effects on school
attendance. Balasz et al. (1986) and Pollitt (1997; 2001) have reviewed the
studies that link nutrition and brain development in children. In most of
these studies, deficits in key nutrients (iron, vitamin A) are associated with
deficits of cognitive ability. Similarly, Bhargava (1997) analyzed a comprehensive longitudinal survey of Tanzanian schoolchildren and found
that the health and nutritional status were important predictors of cognitive and educational achievement test results. He also concluded that the
removal of intestinal parasites such as hookworm and schistosomiasis is
important for child development. An experimental study by Kremer and
Miguel (1999) reached a similar conclusion regarded deworming. In a randomized study of treatment of schoolchildren against hookworm, roundworm, and schistosomiasis, children in the treated schools demonstrated
significantly higher attendance rates than children in schools without
treatment programs. Interestingly, higher attendance was noted for
untreated children within the treated schools, suggesting a spillover effect
of school attendance from the treated children to the untreated children
(e.g., through social norms).
The cost-of-illness literature probably dramatically understates the
costs of nonfatal chronic conditions at all stages of the life cycle. Healthier
workers are physically and mentally more energetic and robust, more productive, and earn higher wages. Their productivity makes companies more
profitable, and a healthy workforce is important when attracting foreign
direct investment. They are also less likely to be absent from work due to
illness (or illness in their family) and to be more productive on the job. The
effect is especially strong in developing countries, where a higher proportion of the workforce is engaged in manual labor. In Indonesia, for example, anemic men were found to be 20 percent less productive than men
who were not. When the anemic men were treated with iron, their productivity increased nearly to the levels of the non-anemic men.57 There is
also the relationship between early health and success in education mentioned in the preceding paragraph. Healthy children are able to learn bet-
35
ter and become better-educated (and higher earning) adults. In a healthy

family, childrens education is less likely to be interrupted due to their ill
health or the ill health of their family. The importance of hookworm is
shown in another one of the more classical examples of ill health interfering with productive activity. Much of the early economic development of
the Southern United States has been linked to the elimination of hookworm and its attendant anemia. Ettling (1981) describes lucidly the effects
and conquest of the germ of laziness that was responsible for low productive capacity.
Intergenerational Spillovers of Disease

Disease of one individual within the family may have important adverse
consequences for other family members, especially the children. An adults
illness may result in poor health, or even death, of a previously healthy
child because of a drop off in care giving and family income. The parents
illness or death may force a child to leave school prematurely, for example, in order to help support the family. The adults illness will also reduce
the transfer of knowledge from parent to child. AIDS-impacted communities in Africa are reporting that the orphaned children are now growing up
without the knowledge of local farming.
One the most pernicious, and least recognized, costs of high rates of
infant mortality and child mortality works through demography. Poor
families compensate for childrens deaths by having a large number of children. The logic is painfully clear. Parents may choose to have as many as
six or more children just to assure themselves of a high probability that at
least one son (or daughter, or both) will survive till the parents old age.
Yet when poor families have so many children, as in much of Africa today,
the household can afford only a very small investment in the education
and health of each child. Thus, a high burden of disease translates into
large families with a low investment per child in education and health.
Although high mortality rates of children are by no means the only reasons for high fertility rates (gender inequalities, lack of mothers education
and opportunities for work, and cultural norms being some other factors),
a reduction in mortality rates can be a big spur to reduced fertility when
combined with family planning, education, and greater labor force participation of women.
The evidence linking fertility levels to infant (under age 1) and child
(under age 5) mortality rates is powerful. Figure 3 is a scatterplot for 148
countries in 1995 showing the striking correlation of the total fertility rate
36
Figure 3. Relationship of Infant Mortality Rate (x-axis) and Total Fertility
Rate (y-axis), 148 countries, 1995 (partial-regression plot)

coef=.04065342, se=.00184397, t=22.05
4.93335
-2.31455
-43.8486
e(imr95 x)
121.351
(TFR, y-axis) and the infant mortality rate (IMR, x-axis).58 Countries with
an IMR of less than 20 have an average TFR of 1.7 children. Countries
with an IMR of over 100 have an average TFR of 6.2 children. The probability of childhood survival is not the only factor in the transition from
high to low fertility, but it is an important one. The mothers education is
certainly another factor. More educated mothers not only have greater
control over the reproductive choices within the household, but they also
have a higher earning power in the marketplace, and therefore a greater
opportunity cost to staying home to raise children. The availability of
family planning services, including access to contraception and family
counseling, is also another important factor. Cultural norms are also critical, as is migration to urban areas.59
It is ironic that high mortality rates of children tend to provoke high
fertility rates among poor couples. In general, the high fertility more than
compensates for the high mortality, an implication of risk aversion of
households. In one numerical illustration, households whose children have
a 75-percent survival rate choose to have six children, of whom an average of 4.5 survive. The households whose children have a 95-percent survival rate have two children, of whom an average of 1.9 survive. The high-
37
Figure 4. Relationship of Log (Infant Mortality Rate) and Population
Growth Rate, 148 countries, 1995 (partial-regression plot)

coef=.85216147, se=.06278833, t=13.57
2.1483
-2.3517
2.00041
e(limr95 x)
1.67383
mortality households end up with a higher population growth rate than

the low-mortality households, perhaps counterintuitively. But this pattern
helps us to understand the surprising fact that countries with high infant
mortality rates have the fastest growing populations in the world, with
consequent strains on the physical environment, especially to the extent
that increasing populations are crowding fragile subsistence farm lands.
The strong positive correlation between the infant mortality rate and the
overall population growth rate is shown in Figure 4. Lowering infant mortality rates will tend to lower, not raise, population growth rate over the
longer run. As noted earlier, however, disease control programs should be
complemented by reproductive health and education programs to ensure
that the transition to lower mortality is accompanied as rapidly as possible by the transition to lower fertility.
Demographic effects operate not just at the household (micro) level
but at the economy-wide (macro) level. When child mortality rates
decline, followed by declines in fertility rates, overall population growth
tends to slow and the average age of the population tends to rise. The
youth-dependency ratio (number of youths per number of adults) also
tends to decline. These demographic changes boost overall per capita GNP
38
and economic growth (see Bloom and Canning 2001). The rising proportion of the population at working age directly raises GNP per
capita.60 The share of the population at ages with high saving rates
increases, so that aggregate saving rates in the economy tend to rise. The
longer life expectancy of each individual also tends to raise the age-adjusted saving rates as well. These effects, like others that we are examining,
are evident in the cross-country savings patterns, though the magnitudes
of effects are hard to estimate with precision, given the number of confounding variables.
Disease and Societal Spillovers

Diseases impose costs on society beyond the costs to individuals and families specifically affected by disease episodes. A high disease burden, for
example, creates a high turnover of the labor force and lowers the profitability of enterprises beyond any direct effects on individual worker productivity.61 Diseases such as malaria pose risks to all individuals who may
enter a particular location, and therefore depress tourism, block otherwise
profitable investments, or prevent the effective economic use of arable
land or other natural resources. Many other tropical parasitic diseases
(e.g., onchocerciasis, schistosomiasis, and trypanosomiasis) similarly render certain tropical areas unlivable or extremely unattractive for certain
forms of settlement or agriculture. A high incidence of disease among a
firms labor force also causes very high turnover and absenteeism, which
depresses profits beyond the effects of individual disease episodes. On
average, firms must hire and train more than one worker for each position
to compensate for high turnover. Many firms have reportedly cut back on
investments in southern Africa because of the high prevalence of AIDS,
which leads to expectations of very high worker turnover.
The classic example of disease impeding a critical investment is the
construction of the Panama Canal. It is estimated that ten to twenty thousand people died primarily from malaria and yellow fever in the first years
of the project between 1882 and 1888, and this was perhaps the dominant
reason for the failure of de Lesseps to repeat the triumph of Suez in the
Americas. The cost of the failure was about 30 million dollars and decades
of delay in completing the Canal. The experience gained by William
Gorgas in controlling those diseases in Havana, which was applied in
Panama, was one of the main factors that led to the successful completion
of the canal by the United States in 1914 (Jones 1990). Similar problems
in controlling diseases today continue to plague investments in mining,
39
tourism, and agriculture. Circumstantial evidence suggests that the dramatic reduction of malaria in several subtropical regions in the 1940s and
1950s (notably the southern European countries of Greece, Italy, Portugal,
and Spain) had a galvanizing effect on economic growth to a large extent
by spurring massive tourism and foreign direct investment.62 Such gains
would greatly exceed the direct costs of the disease as would have been
measured in a cost of illness study.
The risks to enterprises of AIDS in southern Africa seem similarly to
be taking an enormous toll on investments in the region. Part of an enterprises productivity results from the teamwork that is engendered by stable working relations among key personnel. With the massive turnover
resulting from AIDS, firms are constantly facing the rupturing of work
groups and the heavy costs of re-assigning and re-training workers. Such
turnover costs are a direct burden to enterprise profitability, costs that are
additional to the effects on individual worker productivity. The
Economist, for example, reports examples of multinationals in South
Africa hiring three workers for each skilled position to ensure that
replacements are on hand when trained workers die.63 There is considerable anecdotal evidence of enterprises cutting back their investments in
southern Africa as a result of AIDS.
In a similar vein, when a significant proportion of individuals in a
community get sick, the entire community suffers through spillover
effects. The local budget may shift to care for the ill, thereby reducing
money available for other social services. The level of trust in the community may fall, especially if the disease is interpreted as a curse, or as poisoning, or as case of witchcraft, as frequently reported in parts of Africa
in response to AIDS. Skilled workers may flee or die, leaving the community without the technical or entrepreneurial leadership that it requires.
Social morale may flag. Large numbers of orphans left by AIDS may strain
the social support networks. Household saving rates are likely to fall, and
with that the rate of society-wide capital accumulation. Even the direct
time and expense of the frequent vigils and funerals may have a significant
adverse effect on the local economy, a phenomenon clearly apparent in
some of the southern African countries heavily affected by HIV/AIDS.
A high disease burden disrupts the national budget just as it disrupts
a familys budget. The health care system is strained, and requires more
resources, including perhaps donor resources that might otherwise have
gone to meeting other needs. Tax revenues collected by the government
are reduced to the extent that economic activity is diminished (such as
40
when tourism declines or enterprise output is disrupted for other reasons).

The combination of increased budget demands and reduced budget revenues may lead to significant budget deficits that in turn destabilize the
macroeconomy, with further adverse effects on the economy.
The Epidemiology of Disease in Low-Income Countries

The population health of developing countries in recent decades has been
a story of good news, bad news, and disastrous news. The good news is
that in most regions of the developing world, the second half of the twentieth century saw an unparalleled improvement in global public health.
Between 1960 and 1995, life expectancy in the low-income countries of
the world improved by 22 years, as opposed to 8 in the developed countries. On a global average, the under-five mortality rate declined from 150
per 1,000 live births in the 1950s to 40 per 1,000 live births in the 1990s,
with marked decreases in every decade. These gains, moreover, did not
simply occur by themselves, as a natural fallout of economic development.
They rather reflect the power of health care and related investments. Over
the past three decades, various immunization campaigns and child survival strategies have increased by millions the number of children protected against the predations of common childhood infections. Mortality has
also fallen among nonsmoking adults. Both these gains have been aided by
other factors, including particularly the spread of education. These gains
therefore show the efficacy of well-targeted investments in health, and
presage what can now be accomplished.
The bad news is that despite these impressive achievements, the total
burden of preventable disease in developing countries remains shockingly
high, with profound human and economic costs. As we saw in Table 1, life
expectancy in the 48 least-developed countries is just 51 years, compared
with 78 in the high-income countries.64 Infant mortality rates are 100 per
1,000 live births in the least-developed countries, compared with just 6 in
the high-income countries. According to WHO estimates for 1998, infectious diseases were the worlds biggest killer of children and adults. They
accounted for 13.3 million out of a worldwide total of almost 54 million
deaths. In 1998, up to 45 percent of deaths in Africa and Southeast Asia
are thought to have been due to an infectious disease, while worldwide 48
percent of premature deaths (under age 45) are thought to have had an
infectious etiology. For low- and middle-income countries combined,
almost a third of deaths were due to preventable and/or treatable conditions of communicable diseases, maternal and perinatal conditions, and
41
Table 6. AIDS Epidemic, Selected Regions, end-1999 (000s)

Region
People living
with HIV/AIDS,
end-1999
AIDS Deaths,
1999
AIDS Orphans,
1999
Adult Prevalence
(%), end-1999
Global
34,300
2,800
13,200
1.07
Sub-Saharan Africa
24,500
2,200
12,100
8.57
East Asia and Pacific

South and Southeast Asia
530
18
0.06
5,600
460
850
0.54
Eastern Europe and Central Asia
420
15
0.21
North Africa and Middle East
220
13
15
0.12
Western Europe
520
0.23
North America
900
20
70
0.58
Caribbean
360
30
85
2.11
Source: UNAIDS, Report on the Global HIV/AIDS Epidemic, June 2000.
nutritional deficiencies. The death toll from these diseases in a single year
is staggering: 16 million deaths, with just a few conditions causing the
lions share. Effective interventions exist to reduce the mortality associated with each of these conditions, but these interventions do not reach hundreds of millions of people on a reliable basis. If we consider just the case
of vaccine-preventable diseases, the Global Alliance on Vaccines and
Immunizations (GAVI) estimates that worldwide there are 2.9 million
deaths per year from diseases readily combated by immunization, the
overwhelming proportion in developing countries.65
The disastrous news is that one single new virus, the human immunodeficiency virus (HIV) that causes AIDS, has in just one generation plummeted much of sub-Saharan Africa and some other parts of the world into
the most devastating pandemic in modern history. The first cases of HIV
were identified in the early 1980s, presumably after the virus crossed over
from an animal virus in mutated form into human populations some
decades earlier. But in just 20 years, HIV/AIDS has caused an estimated 22
million deaths (including 2.8 million in 1999), brought untold human suffering, and infected a total of 58 million people, of whom 36 million are
now alive. (Table 6, with data for the end of 1999, shows 34.3 million
people infected.) Most of these individuals are likely to die premature
deaths from the complications of AIDS, though their lives may be greatly
extended by current treatment protocols, and even saved from AIDS if
42
improved technologies are successfully developed in the coming years. In

some societies, particularly in eastern and southern Africa, the pandemic
has advanced to an alarming stage in which a quarter or more of the adult
population is infected. In many other parts of the world, especially the
highly populous regions of Asia, the pandemic is in a early stage, posing
threats that tens of millions more will succumb in the coming years unless
effective control strategies that have already been identified are introduced
on a much wider and more intensive scale.
The health prospects of the poorest billion could be radically
improved by targeting a relatively small set of diseases and conditions.
The primary targets are:
HIV/AIDS
malaria
tuberculosis
maternal and perinatal conditions
widespread causes of child mortality including measles, tetanus,
diphtheria, acute respiratory infection, and diarrheal disease
malnutrition that exacerbates those diseases
other vaccine-preventable illness
tobacco-related disease
These conditions are not the only health problems that afflict the
poor: the poor contract everyone elses diseases as well as the diseases
heavily concentrated among themselves. However, these diseases account
for a large proportion of avoidable mortality of the poor, where we measure avoidable mortality by comparing the death rates in poor countries
with the death rates experienced by nonsmokers in the richest countries on
an age-adjusted basis.66 We therefore focus on the conditions associated
with the greatest excess mortality in the poor countries relative to the rich
countries, and note that these conditions afflict mainly the poor within the
low-income countries.
Breaking the results down into three age groups, the study found that
avoidable mortality accounts for about 87 percent of the total chance of
death among children up to the age of 5 in low- and middle-income countries. Among males aged from 5 to 29, 60 percent of total mortality was
calculated to be avoidable, while for females in the same cohort the figure
was 82 percent, the higher level largely due to risks incurred through pregnancy and childbirth. Among women from 30 to 69, 51 percent of the
mortality was avoidable; only among men in that age range did avoidable
mortality fall to less than half total mortality, at 43 percent.
43
It should be obvious that not all the avoidable mortality identified

by this approach can, in fact, be avoided in the near term, since to do so
would involve immediately raising environments and health systems to the
standards of developed countries; though this process need not be as slow
as many might imagine and can surely be accelerated, it cannot be rendered arbitrarily short. But it is not unreasonable to think of this level of
care as an ultimate aspiration.
Addressing the Disease Burden

Crucially, there are already effective interventions that can reduce the
mortality associated with each of these diseases, though obviously it is
also important that better ways of treating and preventing many of these
diseases be developed. Some of these diseases may even be susceptible to
elimination; all can be controlled to some extent, and that extent is often
large. Progress is limited neither by an intractably large range of options,
nor mainly by ignorance of what needs to be done. The usual complex and
interlocking problems of poverty are all operative: the poor may lack the
knowledge to protect themselves adequately or seek needed services; they
may lack the power to protect their rights; or they may lack income to
access services. The best way forward is on two tracks. One is investing in
the health systemto make it strong enough, and well-funded enough,
and with the right priorities to deliver a relatively small number of essential interventions. The other is by complementary steps in education and
in broader institutional advances, such as community involvement, so that
the poor can effectively get access to and are motivated to seek out these
essential interventions.
Striking progress can and has been made in many disease categories
and most regions of the world. A particularly conspicuous form of
progress has been the historically unprecedented ability to move beyond
the control of some diseases to their elimination or eradication.67 The
eradication of smallpox stands with landing on the moon as a paradigmshift in human achievement. For todays skeptics, it is useful to recall that
many believed that smallpox eradication would also be impossible; the
vote to pursue smallpox eradication passed the World Health Assembly in
1966 by two votes!68 Polio, already humbled to such an extent that its
contribution to the global burden of disease is minimal, is likely to be
eradicated in the near future. Such eradications are not merely great public-health achievements: they may also represent a recurrent saving in the
form of vaccinations no longer required.69 Similarly, the elimination of
44
measles, still a major killer800,000 deaths in 1998is no longer outside the bounds of possibility for major regions. Even global eradication
may be feasible if global vaccination levels can be raised. Malawi, one of
the poorest countries in the world, where 20 percent of the population has
no access to health services and less than 50 percent has access to safe
water, has recently committed itself to high levels of routine measles
immunization and to campaigns to catch those missed out by routine
efforts. In 1999, there were no reported childrens deaths due to measles
in Malawi, and only two confirmed cases were seen throughout the country. In addition to programs aimed at elimination of polio and measles,
WHO is currently leading initiatives, greatly supported by donations from
the pharmaceutical industry and support from nongovernmental organizations, aimed at the global eradication or elimination of seven other diseases, most of which impose their heaviest burden on poor communities:
Chagas disease, guinea-worm disease, leprosy, lymphatic filariasis, neonatal tetanus, iodine deficiency disorders, and blinding trachoma.
Vaccination is not the only vehicle for success. Where implemented,
directly observed treatment, short-course (DOTS) for tuberculosis is
achieving excellent cure rates.70 For malaria, the introduction of modern
insecticides and improved case management (ie, treatments of patients
with anti-malarials) can have a significant impactin much of Asia and
Latin America, deaths due to malaria have been reduced spectacularly.
The recent resurgence of the disease, while worrying, has never threatened
these countries with death tolls like those of the past. In Africa, pilot projects using insecticide-treated mosquito nets have shown high efficacy in
reducing mortality rates when there are high levels of mosquito net use.
Diarrheal disease can be addressed by widespread promotion of oral rehydration therapy, along with improved sanitation. Such interventions have
made significant inroads into the dreadful toll of this disease among children: deaths from diarrheal disease around the world has dropped from
4.6 million a year in 1980 to 3.3 million a year in 1990 to 1.5 million a
year in 1999.
Some specific case studies of successes with these diseases have recently been compiled by the lead international agencies involved in health, to
stress the actual successes, on the ground, in many countries around the
world. 71 These include:
HIV/AIDS
Drop in HIV prevalence in military conscripts in Thailand
45
Increasing condom use by sex workers and declining STIs

in Thailand
Reduced HIV prevalence among 13- to 19-year-olds in Uganda
TB
Reduction, due to DOTS, of TB cases in Peru
Reduction, due to DOTS, of mortality rate from TB in China, India,
and Nepal
Malaria
Sharp reduction in malaria deaths in Viet Nam due to improved
case management and insecticide-treated mosquito nets
Reduced malaria incidence in Azerbaijan due to insecticide spraying,
chemoprophylaxis, larviciding, and improved case management
Reduced malaria incidence in coastal Kenya due to insecticidetreated mosquito nets
Childhood Diseases
Reduced child mortality rate in Mexico through oral rehydration
therapy
Reduced deaths from respiratory infection in Pakistan
Dramatic fall, due to immunization, in measles cases and deaths in
Malawi
Reduced severe anemia in the United Republic of Tanzania through
school-based de-worming
Sharp reduction in child mortality rates through community-based
programs in Brazil
Maternal and Perinatal Conditions
Reduction of maternal deaths through skilled birth attendants in
Sri Lanka
Reduction of mother-to-child transmission of HIV through
antiretroviral drugs
Reduction of mother and infant deaths due to immunization with
tetanus toxoid in Bangladesh
Tobacco-Related Illness
Drop in cigarette sales and rise in tax revenues through an increase
in excise taxes on cigarettes in South Africa
Comprehensive bans on tobacco advertising and promotion in
Poland, South Africa, and Thailand
Impressive as they are, though, such achievements represent at best a
half-finished task. Although one must be impressed that the world has
reduced child mortality rates from 150 per thousand to 40 per thousand
46
live births, one must at the same time realize that in Africa the rate is still
150 per thousand, and that in some African countries, as a result of
HIV/AIDS, the rate is rising rather than falling. Ominously, the situation
is not just one of incomplete progress, but one of incipient backsliding.
Improvements in public health worldwide are slowing down, and are
being reversed in regions of high HIV/AIDS prevalence. Although child
mortality around the world has declined in every decade since the 1950s,
it did so at a significantly higher rate in the 1970s and 1980s than it did
in the 1990s.
In some of the worlds poorest countries, the coverage of many basic
interventions is falling, not rising. In many countries, the percentage of
mothers whose births were attended by trained midwives or doctors is
falling. Despite the importance of vaccination for child survival, levels of
childhood vaccination stagnated or dropped in many poor countries in the
1990s, leaving tens of millions of children uncovered by immunizations.
As a result, children in poor countries still suffer 1.6 million deaths every
year due to measles, tetanus, and pertussis, even though these diseases
have been substantially eliminated in the high-income countries.
Improvements in the reach of immunization services could drastically
reduce this number, as has been shown in many countries with successful
aggressive efforts against measles. Coverage with other valuable and effective vaccines widely used in the developed world is even poorer. Many vaccines in routine use in the rich countries (such as hepatitis B and
Haemophilus influenzae type b, or Hib) have barely been introduced into
some low-income countries. It is estimated that about one-quarter of the
1.8 million children who die of acute lower respiratory tract infection each
year succumb to Haemophilus influenzae type b and perhaps an equivalent proportion to Streptococcus pneumonia, for which a new vaccine has
recently been introduced in high-income countries.
One of the most important health interventions is greater attention to
reproductive health, not only to control the spread of sexually transmitted
infections (STIs) such as HIV/AIDS, but also to limit fertility through family planning, including access to contraception.72 Many of the most disease-burdened places on earth have very high population growth rates,
putting enormous stress on these societies and their development
prospects.73 While the high-income countries have population growth
rates below 1 percent per year (0.7 percent in 19901998), the poorest
countries have population growth rates of about 2 percent per year (2.0
percent in 19901998), or 2.6 percent excluding China and India.
47
Although we did not ourselves make cost estimates of the increasing need
for family planning services and an adequate supply of contraception,
there is clearly a donor financing gap here that will have to be addressed,
though it represents only a modest proportion of total funding needs.74
Many people wonder whether reducing the death rates in the lowincome countries wouldnt thereby exacerbate the population pressures,
leading the societies to face increased hardships of hunger, land scarcity,
and falling output per person. The question is a valid one: if more individuals are saved through health interventions, for what kind of life are
they being saved? The answer, fortunately, is an optimistic one. Health
interventions, if well managed, will contribute to slower, not faster, population growth, but for this to occur it is important to combine health interventions with intensified efforts to offer family planning services and
increased access to contraception. Weve already noted that poor households will choose to have fewer children (and to invest more in the education and health of each child) if they are confident that the children will
survive and if they have access to family planning and contraception. With
effective family planning programs, the lag between falling mortality rates
of children and falling birth rates can be cut sharply, or even eliminated.
Bangladesh and several states of southern India (especially Tamil Nadu
and Andhra Pradesh) are examples of places that eliminated the lag
between falling death rates and falling birth rates, thereby enjoying
improved health and declining population growth at the same time.75
The AIDS Pandemic

Of all the health problems facing the poorest people of the world, the
HIV/AIDS pandemic is undoubtedly the most dramatic. The pandemic has
reached every country in the world, and in many it is worsening rapidly.
In southern and eastern Africa, infection is running at levels unprecedented for any disease so consistently fatal. The damage done already in these
countries, and the potential over the coming decade for deaths on a scale
not seen in any previous pandemic, make HIV/AIDS a unique challenge to
health systems on a global scale. Three million people died of AIDS in
2000, of whom 2.4 million were in sub-Saharan Africa. Twelve million
children in Africa have already been orphaned by the disease, and that
number could grow to a staggering 40 million by the end of this decade if
more effective control measures are not undertaken. The disease will devastate African society and cripple economic development in Africa and
other high-prevalence regions unless brought under control.
48
Although HIV/AIDS is a global problem, the pandemic looks very different in different places. Nearly three-quarters of persons living with
HIV/AIDS are in sub-Saharan Africa. In eastern and southern Africa, the
disease has spread quickly and widely throughout the population. HIV
prevalence in antenatal clinic attendees doubled from 18 percent to 35
percent in Botswana from 1994 to 1999, and in South Africa increased
from 3 percent to 20 percent over the same time period. In central and
western Africa, from 2 to 10 percent of adults are infected. Heterosexual
transmission is the dominant source of new cases in sub-Saharan Africa,
and more women than men are infected. An explosive increase in new
HIV infections has taken place in the countries of the former Soviet Union,
due primarily to transmission by injection drug use. All of the countries
with severe AIDS epidemics in South and East Asia, with the exception of
Cambodia, have also experienced early and dramatic epidemics among
injecting drug users. In addition, Cambodia, India, Myanmar, and
Thailand have large epidemics based on heterosexual transmission. The
epidemic in the Caribbean is also predominantly heterosexual, with some
of the highest infection rates outside of sub-Saharan Africa. Throughout
South America, national HIV prevalence is generally 1 percent or less,
spread mainly through sex between men and injection drug use. Outside
of sub-Saharan Africa, more men than women are living with HIV/AIDS.
The reasons for the variations in prevalence between countries are not
entirely clear. The time since the epidemics introduction is certainly a factor, as are patterns of mobility, sexual activity, and perhaps the variations
in the viral subtypes as well.76 Southern and eastern Africa seem to be
uniquely characterized by a very large number of migrant male workers
and dislocated households, a legacy of apartheid, regional violence, and
labor practices of the mining sector. These patterns most likely result in
high rates of sexual contact with commercial sex workers. High levels of
genital ulcer disease and low levels of male circumcision may also help to
explain why the highest levels are seen in southern and eastern Africa, as
opposed to west Africa. Nevertheless, no country has escaped this pandemic. HIV has spread in rich and poor countries and, within countries,
among both rich and poor.
While some countries are already burdened with very high prevalence
rates, others, such as China and India, are still at an early phase of the
pandemic, so that timely control measures can head off an explosive
growth of infections. The evidence, still incomplete, suggests a dramatic
surge of HIV infections in both China and India, threatening the two most
49
populous societies in the world. The costs of inaction in these countries

could be literally tens of millions of deaths that could be averted through
policies with a sense of urgency today.
The key to curbing and eventually reversing the HIV/AIDS pandemic
is blocking the transmission of the virus. Regarding sexual transmission of
the virus, the predominant form of transmission, there are two main
strategies: reducing the number of sexual partners of people already infected, partly it is hoped through voluntary counseling and testing of those
already HIV infected; and reducing the likelihood that sex between an
infected and uninfected person will lead to disease, for example through
the use of condoms. For transmission caused by blood exchanges, reducing the sharing of needles among injecting drug users, screening blood
used for transfusions, and sterilizing injecting equipment in blood transfusions and medical procedures are all vital. For prenatal and perinatal
mother-to-child transmission, the use of antiretroviral therapies has been
shown to be effective. Prevention would of course be hugely helped by the
development of vaccines against HIV; even vaccines of relatively low efficacy could substantially change the dynamics of the pandemic. The development of effective vaccines is thus the highest research priority in the
field of HIV/AIDS. However, without a vaccine at hand there is still much
that can be done to prevent the spread of the disease.
The most clearly effective preventive interventions against HIV are
those that change transmission rates among groups thatbecause of high
rates of partner change, increased susceptibility to infection, or bothare
most likely to get infected and pass the virus to others. Commercial sex
workers are a very important group in this regard. Around the world there
have been significant successes scored through programs that seek to
increase condom use among commercial sex workers, mostly through education provided by peers. First in Thailand and now in Cambodia, efforts
to identify areas of commercial sex work, and then to provide peer education and treat STIs, have resulted in dramatic declines in HIV not just
among the vulnerable sex workers but in the general population too. The
Indian state of Tamil Nadu seems on the verge of similar success.
Interventions with sex workers can be combined with improved management of other sexually transmitted infections, which can make people
more vulnerable to infection. Such improved treatment seems likely to be
very useful in HIV control, though divergent studies of the issue mean that
more research is needed. Treatment of STIs may also provide a point of
access to the clients of sex workers and other men with numerous sexual
50
encounters. Modeling studies done for the Commission suggest that a

combination of peer education programs for sex workers and their clients
and STI services could hold down the eventual number of Indian AIDS
deaths by tens of millions.
There is also a pressing need for programs aimed at adolescents, an
especially vulnerable group. Although there is little reliable information
on the efficacy of interventions with adolescents, a study in Namibia
(Shanton et al. 1998) has suggested that well-designed school-based programs can help increase both the age at which adolescents first have sex
and the likelihood that they will use condoms. Among adults, workplace
peer education may also lead to significant behavioral change: a randomized trial of this type of intervention in Zimbabwe found a 30 percent
reduction in HIV-1 incidence (Machekano 1998).
While there have been many well-documented successful pilot projects to prevent HIV, there are very few examples of successful policy
affecting behavior on a national scale. When national-scale successes have
been achieved, such as reducing the HIV-prevalence rate in Uganda and
keeping it low in Senegal, outspoken and frank national leadership has
played an important role. Many politicians, however, have run away from
HIV/AIDS rather than mobilizing action against the disease. They are
afraid of publicizing a fatal condition for which they lack the budgetary
resources to provide solutions. Increased donor support for treatment
would enable politicians to speak much more openly about prevention as
well. Moreover, the transmission of the virus touches on human sexuality
and the most private and intimate behaviors, as well as highly stigmatized
behaviors such as injecting drug use and homosexuality. Political leaders
are reluctant to engage in public discourse on these topics or to endorse
highly effective policies that may be perceived by the public as supportive
of socially deviant behavior (such as promotion of condom use by commercial sex workers or clean needles for injecting drug users).
A second reason for lack of success in national programs is the capacity constraints, including a shortage of human resources in government
and NGOs, in the face of an enormous, complex, and diverse implementation agenda sometimes driven by donors and the international community. Trying to do too much with too few people can result in low quality
and limited coverage for lots of initiatives. Additional financial resources
are enormously important for scaling up capacity, including training. In
the short term, selectivity and prioritization and financing of scaling up
51
are critical if coverage, quality, and impact of those interventions are to be

ensured.
At the same time that we emphasize prevention, we must provide
effective treatment for the 36 million people currently living with the
infection, 95 percent of whom are in developing countries. These individuals will die early and painful deaths unless they have access to appropriate medical care, which can markedly extend life. Without treatment, they
will leave behind grieving families, tens of millions of orphans, and social
and economic devastation in the hard-hit regions. Treatment is not just a
moral necessity, but a necessary component of economic stabilization and
an ultimate return to economic development in high prevalence parts of
the world. It has also become much more affordable, with significant
drops in prices of the necessary medications. Total annual treatment costs,
including drugs and medical services, are now around $500 to $1,000 per
year in sub-Saharan Africa, probably about the same as the average annual income of the prime-aged workers being struck down by the disease.
This makes such treatment cost effective in the aggregate economic terms
described earlier, even if still unaffordable by the individuals themselves.77
Treatments for some of the opportunistic infections (OIs) that contribute to HIV/AIDS mortality have been available since the mid 1980s,
and some are in cost-effective use in parts of the developing world (most
notably antibiotics effective against tuberculosis). Since 1996, highly
active antiretroviral therapy (HAART), which acts directly on the virus,
has dramatically increased the life expectancy of people receiving treatment. Note that treatment for OIs, however, will significantly extend life
only in conjunction with HAART. Tragically, because of the costs of treatment, only a negligible fraction of those in low-income countries who
would benefit from treatment are able to receive it. It is estimated that, of
the 25 million HIV-infected Africans and the roughly 4 million each year
with advanced HIV-related disease, only around 10,000 to 30,000
Africans receive antiretroviral therapy, and many of those are surely
receiving an ineffective course of treatment because they can afford the
drugs only sporadically. UNAIDS and WHO estimate that it will be possible to scale up coverage to around 5 million individuals in low-income
settings, with substantial coverage in Africa, by the end of 2006.
Since HIV mutates readily, the widespread availability of HAART is
certain to lead to an increase in drug-resistant strains of HIV. It is therefore vital that HAART interventions be managed with great care and public health methods in such a way as to minimize this development. It has
52
been suggested that the directly observed treatment approach used in

tuberculosis control might be applied to HAART, but the challenge would
be qualitatively different, since HAART requires lifetime adherence.
Fortunately, the complexity of the HAART regimen is being reduced significantly, for example by packaging the full combination of antiretroviral
medicines into a single pill to be taken twice a day (for example, Trizivir).
Because of the near inevitability of growing drug resistance, it seems that
an ongoing commitment to HAART will require the introduction of new
drugs over time, ideally drugs requiring ever-simpler regimens. Especially
because of the concerns over drug resistance, but also more generally
because HAART remains a complex regimen of a complex disease, the
introduction of HAART in low-income settings should be accompanied by
extensive operational research to test the effectiveness of alternative regimens and approaches. We believe that at least 5 percent, and perhaps
more, of total funding for HIV/AIDS treatment should be set aside for
operational research.
The introduction of treatment in low-income countries should certainly be undertaken with an eye toward bolstering prevention as well.
Although treatment should be viewed primarily in medical terms (ie, prolonging lives of sick individuals) rather than in public health terms (ie,
breaking the transmission of the virus), treatment programs should be
designed in a way to leverage prevention efforts as well. For example, it
makes sense for donor-supported programs to offer funding for treatment
only in conjunction with active prevention programs, since both are necessary to combat the pandemic. Second, the availability of treatment will
greatly increase the numbers of individuals coming forward for voluntary
counseling and testing (VCT), once they know that treatment will be
available in the event that they test positive. It is estimated that only
around 5 percent of HIV-infected Africans currently know their status.
That number could rise sharply in the event of increased access to treatment. With effective VCT, it may be possible to bring about behavioral
change of those already infected but currently unaware of their condition.
Of course, this positive outcome must be balanced against a risk that
access to treatment (and a nave belief that treatment offers a cure)
could result in more risky sexual behavior on average, including by those
not yet infected. Third, it is possible, though not yet proved, that individuals on treatment (with high adherence) will themselves become less infective because of a reduced number of viruses in the body (reduced viral
load).
53
Both prevention and treatment are costly. Treating opportunistic

infections will require substantial resources on the same order of magnitude as antiretroviral therapy. We estimate that the total costs of AIDS
care could reach $14 billion by 2007 and around $22 billion by 2015,
roughly divided in thirds between prevention, OI treatment, and antiretroviral therapy (see Table A2.2). This level of spending would permit
around two-thirds of HIV-infected individuals in the low-income countries
to be covered, as needed, by treatments for OIs and by antiretroviral therapy (see Table 7). The numbers actually under care at any point would be
much less than two-thirds of the HIV-infected individuals, however, since
antiretroviral therapy would apply only for patients whose immunological status (e.g., viral load and CD4 count) exceed certain clinical thresholds, and treatment for OIs would of course depend as well on the specific conditions of the patients as well. We assume that the Global Fund to
Fight AIDS, Tuberculosis, and Malaria (GFATM) would pay for part,
though not all, of the HIV control in low-income countries. Specifically,
we have recommended that the GFATM should fund around $8 billion per
year by 2007, and $12 billion per year by 2015, with the balance of needs
met by other bilateral and multilateral donor programs and by domestic
resources of the recipient countries.
Levels of Health Spending in Low-Income Countries

The essential interventions needed to eliminate much of the avoidable
mortality of the low-income countries are not expensive, but are they not
free either. A core part of the Commissions work has been to estimate the
costs of scaling up critical interventions in the low-income world, defined
for these purposes as all of sub-Saharan Africa plus all other countries of
income less than or equal to $1,200 per person per year (see Table A2.B,
for a complete list of countries and country groupings). We have also prepared the cost estimates by various sub-groupings of countries on a
regional and income basis. The set of interventions, and the target levels
for coverage of those interventions, are shown in Table 7. For example, it
is assumed that DOTS coverage for TB treatment will rise from an estimated 44 percent of TB-infected patients to 60 percent by 2007, and then
to 70 percent by 2015. These coverage numbers may look low to some;
we have somewhat conservatively estimated what is feasible based on the
existing levels of infrastructure and trained personnel, and assuming a
bold but feasible process of health-sector investments and scaling up from
this point forward. The detailed description of the set of interventions is
54
Table 7. Coverage Goals for Major Scale Up (and Estimated Current 2002
Coverage)
2002
2007
2015
TB
44%
60%
70%
Malaria
Treatment
Prevention
31%
2%
60%
50%
70%
70%
HIV
Prevention (outside health sector) 1020%
Prevention (within health sector) < 1% 10%
70%
40%
80%
70%
Care of OI
40%
70%
HAART
6%10%
< 1%
45%
65%
Immunization*
BCG/DPT/OPV
HepB/HIB**
75%
90%
90%
Measles
68%
80%
80%
IMCI
ARI
Diarrhea
59%
52%
70%
70%
80%
80%
Maternal
ANC
65%
80%
90%
Skilled birth attendance
45%
80%
90%
Smoking control polices

(tax greater than 80%,
ad and promotion bans,
consumer information)
20%
80%
80%
* includes provision of Vitamin A; ** HepB/HIB are not included in 2002 coverage.
presented in the WG5 Synthesis Report. Note that the costs aim to provide a full economic price of providing the health interventions, including
the direct costs of medicines and health services, capital investments, complementary management and institutional support, and investments in
training new personnel.
To reach the increased coverage rates by 2007 would require an additional $14 per person per year (2002 prices in US dollars) in the lowincome countries, and $22 per person per year in the least-developed
countries, on top of the existing level of expenditures in 2002. With current domestic resources of around $21 per person in the low-income countries (and just $13 per person in the least-developed countries), total
expenditures by 2007 would be around $34 per person per year in the
55
low-income countries, and $38 per person per year in 2015. We might
regard this level, very roughly, as the minimum per capita sum needed to
introduce the essential health interventions. It is clearly a quite modest
level compared, say, with the average expenditures in the high-income
countries of more than $2,000 per person per year. But it is a high level
compared with current outlays, and, as we stress, it is high compared with
the ability to pay of the low-income countries, especially the least-developed countries. The specific financing needs will of course vary across
countries and regions, depending on the disease epidemiology (e.g., the
incidence and prevalence of malaria, HIV/AIDS, and TB) and local economic conditions (reaching much higher levels in the middle income subSaharan African countries afflicted by HIV/AIDS). Most of the $30 to $45
will have to come through public outlays, for two reasons: to cover public goods (such as infectious disease control), where individuals lack the
incentive on their own to take the necessary protective actions; and to
ensure access for the poor, who lack adequate household funding.
We note that our estimate of the per capita costs of providing essential services is in line in general terms with other recent studies that have
approached this issue from somewhat different perspectives. For example,
David Evans, Chris Murray, and colleagues at the WHO have estimated
that effective health services require around $80 per person per year
in purchasing-power-parity-adjusted dollars (Evans et al. 2001). Using
WHO estimates that each $1 of expenditure in a low-income country is
equal to about $2 to $3 on a PPP-adjusted basis, the $80 threshold is akin
to a $33 to $40 threshold in current (rather than PPP-adjusted) dollars,
and thus is in line with our own estimates. Using a very different
approach, cost estimates of the high-quality mission-hospital sector in
Ghana also suggest that scaling up would require annual spending per
covered population of around $45 per person in current dollars, not
including initial capital costs for physical infrastructure (Arhin-Tenkorang
and Buckle 2001). A recent study undertaken at the International
Monetary Fund (IMF) suggests that effective health coverage would
require around 12 percent of GNP of the low-income countries in order
for the countries to meet the International Development Goals of reduced
infant mortality.78 For the least-developed countries, with annual GNP per
capita of around $300 per person, this suggests spending on the order of
$36 per person per year. If anything, we are on the low end of the range
of estimates.
56
Table 8. Domestic Spending and Donor Assistance on Health, 19971999

Public Spending
on Health
(per person,
1997, $US)
Total Spending
on Health
(per person,
1997, $US)
Donor
Assistance
for Health
(per person,
average annual
19971999)
Donor
Assistance
for Health,
annual average
($US millions
19971999)
11
2.29
1,473
13
23
0.94
1,666
Lower-Middle-Income
Developing Countries
51
93
0.61
1,300
Upper-Middle-Income
Developing Countries
125
241
1.08
610
1,356
1,907
0.00
0.85
5,052
High-Income Countries
All Countries
Note: Unweighted averages for countries in respective categories. Includes only countries with
population of 500,000 or more in 1997.
We stress, however, that not a lot of quality health services can be

purchased at $30 to $45 per person, certainly not the kind of comprehensive care found in the high-income countries, where outlays are currently
$2,000 or more per year!79 Our estimates refer to a rather minimal health
system, one that can attend to the major communicable diseases and
maternal and perinatal conditions that account for a significant proportion of the avoidable deaths in the low-income countries. Our costing estimates do not include some key categories that will need to be part of any
operational health system, such as trauma and emergency care (broken
bones, appendectomies); tertiary hospitals; and family planning (including
distribution of contraceptives) beyond the first year after birth. We regard
these estimates as an accurate though lower-end assessment of what is
needed for a decisive drop in avoidable deaths due to the disease conditions on which we are focusing. Delivering these interventions effectively
will, however, strengthen the capacity of local health services to respond
to the daily needs of health care as well, an important precondition for
poor households to increase their utilization of publicly financed health
services.
Most low-income countries dont even achieve the minimally acceptable levels of services, or the spending per person needed for that. Among
the 48 least-developed countries (Table 8), the unweighted average outlays
for health stood at $11 per capita in 1997, of which $6 came from the
57
budget and the rest mainly from out-of-pocket expenditures. Among the
other low-income countries, average outlays were $23 per capita in 1997,
still below the minimal threshold, of which around $13 came from budgetary outlays. These sums include the health outlays backed by donors. In
fact, current levels of donor support are extremely lowjust $2.29 per
capita in the least-developed countries in 19971999, and $0.94 per person in the other low-income countries.
Mobilizing Greater Domestic Resources for Health

The inadequate levels of health spending are, first and foremost, a reflection of the basic arithmetic of poverty. When a country has a GNP of just
$500 per person per year, even health outlays equal to 5 percent of GNP
amount to merely $25 per person per year. There are 1.8 billion people living in countries with per capita income less than $500 per capita, and all
but 35 million of these people live in countries that have average health
outlays below $25 per person per year (the exceptions being Kenya and
Nicaragua). Not a single country with income of $500 or less per year
(which includes 44 countries in our data sample) managed to spend $30
per person per year on health. And not a single one of the governments in
those countries raised even $20 per person per year for public outlays on
health.
As shown in Figure 5, for 167 countries in 1997, health expenditures
were determined mainly by national income.80 Each 1 percent rise in
income leads to a slightly more than 1 percent rise in health spending.81 The poorest countries are shockingly poor by the standards of the
high-income world, and their health spending, as a result, is shockingly
low. Even if poor countries allocated more domestic resources to health,
such measures would still not resolve the basic problem: poor countries
lack the needed financial resources to meet the most basic health needs of
their populations. At $30 to $40 per capita for essential interventions,
these costs would represent more than 10 percent of GNP of the leastdeveloped countries, far above what can in fact be mobilized out of
domestic resources.
Nonetheless, the Commission examined carefully the extent to which
increased domestic resources, especially budgetary resources, could be
mobilized for health in low-income countries. With regard to public-sector resources, the capacity to generate increased revenues for health of
course differs across countries, and is based on their economic structures,
tax collection capacities, overhang of internal and external debt which
58
Figure 5. Graph of Log (GNP per Capita, 1997) versus Log (Public Health
Expenditures per capita, 1997) (partial-regression plot)

coef=1.1547074, se=.01670715, t=69.11
e(ltotusd x)
3.86313
-3.96699
-2.81488
e(lypcusd x)
3.2312
budgetary outlays for debt servicing, and many other factors. In general,
as we see in Table 9, poorer countries mobilize a smaller share of GNP in
tax revenues: an average of 14 percent of GNP in low-income countries
compared with 31 percent of GNP in high-income countries. Moreover,
given the limitation on raising broad-based taxes such as income tax or
value-added tax, the tax collection tends to be on international trade and
specific commodities, with consequent high degrees of distortion and a
limited capacity to fund increases in public spending.
Still, there are cases where public spending on health is much less
than could plausibly be mobilized, but the political will is not present.
When societies are sharply divided, for example along geographical or ethnic lines, governments may direct public spending toward a small, favored
minority rather than the broad population. Also, where there is discrimination against women, who are generally responsible for health care within the family, the result is often less attention to the health care needs of
the poor in general, and of women in particular.
Its also true that the meager expenditures are frequently wasted. This
is especially true of out-of-pocket spending of the poor, which goes for
low-quality or inappropriate treatment. In China and India, for example,
59
Table 9. Taxation as a Percentage of GDP

Total Tax
Revenue
Countries
Taxes on
International
Trade
Excises
General Sales
Taxes
Social
Security
Low income (31)

Under $760 per capita
14.0
4.5
1.6
2.7
1.1
Lower middle (36)

$761$3,030 per capita
19.4
4.2
2.3
4.8
4.0
Upper middle (27)

$3,631$9,360 per capita
22.3
3.7
2.0
5.7
5.6
High income (23)

Over $9,360 per capita
30.9
0.3
3.1
6.2
8.8
Source: Government Finance Statistics, IMF. Classification of Countries Incomes is as posted

in the DAC List of Aid Recipients as of 1 January 2000. Number of countries in parentheses.
the rural poor pay out of pocket for around 85 percent of the total health
services that they receive, and much of that goes for unnecessary or inappropriate drugs foisted on them by clinics that fund themselves through
sales of pharmaceutical products, or to unlicensed and unqualified practitioners.82 High and rising health costs exclude a significant proportion of
the poor from essential services, and a very large number of families are
thrown into poverty each year by health outlays.83 In Africa, many households spend enormous sums for informal and traditional forms of care
with dire health consequences. Of course, some private outlays go for
good treatment from the private and NGO sectors. Public outlays as well
can be wasteful or misdirected, as when too much devoted funding goes
toward high-tech curative services for urban elites in the capital cities, and
not enough for the essential interventions to control communicable diseases for the rural poor or to respond to the basic needs for curative and
maternal and child health services of the poor more generally.
Given the limited capacity of low-income countries to mobilize government revenues, and the considerable demands on those revenues for
public administration, infrastructure, agriculture, police, defense, education, and debt servicing in addition to health, it is probably optimistic to
expect that low-income countries could muster even 4 percent of GNP in
budgetary outlays for health. In fact, that level of government outlay for
health was not reached by a single country with per capita income below
$600 per year.84 Although most countries could mobilize more budgetary
spending for health, it is also realistic to assume that increased revenues
60
would not exceed more than 1 to 2 percent of GNP for the low-income
countries. As an indicative guideline for our costing estimates, we have
assumed that on average the low-income countries will increase their
budgetary outlays on health by 1 percent of GNP as of 2007 and by 2 percent of GNP by 2015. For a country at $500 per capita, the increase
would be $5 per person per year as of 2007 and $10 per person per year
as of 2015, not enough to close the gap between the costs of essential services and the available resources. Some inefficiency in the health sector,
both in terms of a poor allocation of resources and inefficiency in the
technology used, could also be addressed, but this is likely to result in savings of no more than 20 percent of existing spending (Henscher 2001).
Only donor assistance can close that financing gap for the low-income
countries.
There are, in fact, two other problems with the current health-financing arrangements of the low-income countries, in addition to the insufficient overall levels of spending. First, the proportion of total health outlays coming through the budget is also relatively low (55 percent), much
lower than in the high-income countries (71 percent). Since public-sector
spending on health is needed to provide critical public goods (such as epidemic disease control) and to ensure enough resources for the poor to gain
access to health services, the meager size of public outlays exacerbates the
problem of the overall insufficiency of resources. Second, the private
spending tends to be out of pocket, rather than pre-paid, so that there is
very little insurance element (ie, risk pooling) built into private spending,
again in contrast to the much higher rate of insurance coverage in
high-income countries. Such private spending, moreover, tends to be inefficient, being spent on high-priced pharmaceuticals and poorly trained
practitioners.
The Commission recommends that out-of-pocket expenditures in
poor communities should increasingly be channeled into community
financing schemes to help cover the costs of community-based health
delivery. The basic idea of such arrangements is to offer local communities an incentive scheme, in which each $1 that the community raises for
pre-paid health coverage would be augmented, at some rate of co-financing, by the national government (backed by donor assistance). These prepayments by the community would mainly cover basic curative health
services other than the package of essential interventions (which are to be
paid for by budgetary funds, with donor support). The local community
would thereby be encouraged to pool its resources, and to provide some
61
kind of community-based oversight of health service delivery. This method

would offer a degree of risk spreading, so that households would not face
financial catastrophe in the event of an adverse health shock to household
income. The national government would also be able to help monitor the
quality of health services provided at the local level. Community-financing schemes are no panacea, and have often failed, but for many places
they seem a promising and flexible mechanism that can often be harnessed
to local needs.
Pre-payments in a community-financing scheme should not be confused with an alternative approach that has sometimes been tried: user
fees. User fees, as conventionally defined, are payments for health services at the time of illness (that is, out-of-pocket expenditures), often levied
on essential interventions. Experience has taught repeatedly that user fees
end up excluding the poor from essential health services, while at the same
time recovering only a tiny fraction of costs.85 Thus the communityfinancing approach differs from user fees in two key respects: first, the former involves pre-payments rather than out-of-pocket expenditures, and
second, contributions need not be used to cover essential services as these
services would be covered by public funding that would be entirely additional to community contributions.
There is another method to raise more revenues for health in lowincome countries: deeper debt relief, with the savings allocated to the
health sector. The Heavily Indebted Poor Countries (HIPC) Initiative will
reduce debt servicing by around 2 percent of GNP for some 30 heavily
indebted poor countries, and perhaps around one-fourth of that will be
allocated directly to the health sector. The debt stock will be reduced by
around two-thirds in present value terms, combining traditional forms of
debt reduction with the expanded relief available under the HIPC initiative. This valuable initiative could be expanded in two ways: increasing
the number of countries included in the initiative, and deepening the
amount of debt reduction on offer. Given the outstanding results of the
first phase, in terms of channeling debt savings into social expenditure,
these seem to be additional initiatives worth taking, though it would entail
further bilateral financial support for a strengthening of the HIPC initiative.86 Of course we should note that the added savings would be only a
small part of the needed increment in donor assistance.
As a basic strategy for health-finance reform in the low-income countries, therefore, the Commission recommends six steps: (1) increased
mobilization of general tax revenues for health, on the order of 1 percent
62
of GNP by 2007 and 2 percent of GNP by 2015; (2) increased donor support to finance the provision of public goods and to ensure access for the
poor to essential services; (3) conversion of current out-of-pocket expenditures into prepayment schemes, including community financing programs supported by public funding, where feasible; (4) a deepening of the
HIPC initiative, in country coverage and in the extent of debt relief (with
support from the bilateral donor community); (5) efforts to address existing inefficiencies in the way in which government resources are presently
allocated and used in the health sector; and (6) reallocating public outlays
more generally from unproductive expenditures and subsidies to socialsector programs focused on the poor.
The financing issues for middle-income countries are somewhat different. Total health outlays are sufficient to ensure universal access to
essential health services. Two basic problems remain, however. First, many
poor households within the middle-income countries nonetheless lack
access to health services, since they are too poor to finance their own
access and the government offers too little funding on their behalf. We
strongly advise middle-income countries to mobilize the needed public
finance to extend coverage to the poorest cohorts and regions. Second, the
demand for coverage of interventions beyond the essential services, especially for noncommunicable diseases, puts increasing financial stress on
the health system. If the payments for this growing range of services are
out of pocket, then households find themselves at risk of financial ruin in
the event of health shocks; and if the payments are from the budget, then
rising costs of health programs become a major concern. Moreover, the
mode of contracting for services (e.g., fee-for-service payments to
providers versus universal access through national health insurance)
makes a difference as well. Fee-for-service systems tend to lead to dramatic cost escalation, as service providers order unnecessary tests and procedures.
The experience of the high-income countries suggests that the tendency of many governments of middle-income countries to attempt to
shift the finance of clinical health services to the private sector, especially
via fee-for-service payments, runs the risk of dramatic cost escalation and
would virtually ensure that a substantial proportion of the population will
lack financial access to services in time of need. A consistent consequence
of introducing universal coverage in OECD countries has been, contrary
to most predictions, a leveling off in the growth rate of health expenditures as a percent of GDP during the past 10 to 15 years (Preker 1998;
63
Thompson and Huber 2001).87 Preker points to the following as potential

reasons: (1) greater policy control over expenditure; (2) elimination of the
pressures for increased spending created by private health insurance; and
(3) in some countries, close to universal coverage had been achieved prior
to its introduction by legislation.
Almost all middle-income countries spend sufficient resources in the
aggregate in the health sector to ensure universal access to essential services.88 Yet this target remains unachieved in most middle-income countries
because of two major reasons. First is the existence of large income
inequalities within society, often along geographical or ethnic lines or
both, and often coupled with a lack of political will to use public resources
to ensure access for the poor. There are pockets of intense poverty in
regions such as rural northeast Brazil and rural western China, and the
impoverished populations there often lack access to essential interventions, with highly deleterious social and economic consequences. Second,
many middle-income countries have not developed insurance for their
informal sector workers. These workers pay out-of-pocket for health services and face bankruptcy when a serious illness strikes.89 The Commission
believes that as part of the economic development strategy of every middle-income country, public finances should ensure universal access to
essential interventions, and this may require fiscal transfers to poorer
regions earmarked for health. Public funding can also provide incentives
for informal sector workers to participate in risk-pooling schemes. The
experience of OECD countries in the past two decades is instructive as to
how equity and efficiency can be improved through budgeting, payment,
contracting, and cost containment measures.
Even if such redistributive transfers are feasible in the longer term,
many middle-income countries will be strapped for cash in the short run.
The World Bank and the regional development banks, working closely
with the countries and with the World Health Organization, should fashion long-term loans and technical support to help these countries scale up
their interventions to the poor. Even though such loans are technically
nonconcessional, they offer the recipient countries better access to financing for health than would be available on the open financial markets.90 Targeted loans from the World Bank to middle-income countries
such as Brazil, China, and Thailand for AIDS and TB have demonstrated
the power of this approach.
64
Removing the Nonfinancial Constraints to Health Services

The constraints that deprive hundreds of millions of the worlds poor of
the needed access to health services go well beyond immediate funding.
Most of the poorest billion people lack access to a health system that is
adequate to the task. The pipes down which funds and materials might be
poured are either too narrow, or clogged up, or full of holes; they may not
go to the places where they are needed, or not be under the control of the
health sector. There may be no pipes at all. This state of affairsthe lack
of an effective and capable health delivery systemlimits all efforts to
scale up the provision of effective interventions. In some cases these systemic problems will become governing constraints if spending is quickly
increased, driving the marginal benefit of spending on materials or staff to
zero. In some parts of some developing countries this is already the case,
with workers sitting idle due to dysfunctional systems.
The removal of structural constraints and the building of new capacity will typically be necessary as part of the scaling-up process. Many of
these constraints can be overcome by more money, soundly used, and
donors should indeed invest amplyin partnership with the recipient
countryin a bold process of health system strengthening. This will take
time, so it is urgent to start now to meet goals many years hence, for
example by building new physical infrastructure, increasing the numbers
and training of health-sector personnel, and strengthening management
systems and capacity. The highest priority for scaling up is at the community level, where actual health services are delivered. We have termed this
the close-to-client, or CTC, part of the health system. Scaling up at the
CTC level involves a basic strengthening of the staffing at this level, an
adequate supply of drugs, and a minimal capacity for transport. It also
involves both the hardware of the health sector (physical plant, diagnostic
equipment, telephone and e-mail connectivity of CTC centers) and the
software, meaning better systems of management and supervision, and
better accountability to the users through local oversight of CTC units.
Without strong community involvement and trust in the CTC system, the
expanded and effective coverage of the poor is unlikely to be achieved.
The state has four roles in a CTC-based delivery system. First, the
state (in conjunction with institutions of civil society) would identify and
justify the set of essential health interventions, based on local epidemiological conditions. Second, the state would guarantee adequate public
finances (including donor support) for universal access to the set of essential interventions. Third, the state would act both as provider, in state-
65
owned clinics and hospitals, and contractor for services, in the case of
nongovernmental providers. And fourth, the state would aim to be the
guarantor of quality of health service provision. In short, the state is the
steward of public health, though not the sole provider in most cases. The
CMH recognizes that this enhanced role of the state in the health sector
would have to be realized at a time when the capacity of governments,
particularly in the poorest countries, is limited, and often subject to
administrative and governance constraints. Addressing these constraints
will be a necessary part of the challenge faced by countries and donors
alike, if the burden of ill health is to be lifted.
In organizational terms, we see the CTC system as consisting of relatively simple hospitals (not necessarily capable of the full range of interventions expected at large urban or teaching hospitals), health centers and,
in some circumstances, smaller health posts. Various outreach services
associated with these units will take interventions directly to the community. Though medical supervision will be necessary, a great deal of the
work in this CTC part of the health system can be carried out by people
other than doctors: by nurses and paramedical staff of various degrees of
training, including midwives. Table 10 shows in summary form our expectation about the organizational delivery of essential services. For each
intervention we indicate the presumptive organizational unit that would
be the predominant provider of the service.
Hospitals within the CTC system will need to be staffed by at least
one doctor and a range of paramedical staff, and may typically be capable
of offering in-patient care to at least 100 people at a time. The purpose of
these hospitals is to deal with acute and peculiarly dangerous or complicated cases. In the area of maternal health they would be the referral destinations for eclampsia, postpartum hemorrhaging, puerperal sepsis, and
complications associated with poorly performed terminations. They
would be the appropriate setting for some case management of severe
cases of childhood disease and malaria, and for the treatment of complicated tuberculosis cases. Antiretroviral treatment for AIDS patients would
probably best be introduced at this level. Such hospitals should have some
laboratory capacity and at least one operating theater, anesthetic and Xray facilities, and it will have an all-purpose dispensary.
A well-functioning CTC health system will require at least one and
possibly two forms of facility-based access beyond the hospital setting.
The principal requirement is for a set of health centers staffed primarily by
nurses and trained paramedical staff. It is at the health center that most
DOTS for
complicated TB
cases
DOTS
Hospital
Health center/
health post
Outreach services
TB
Level of Care
Indoor residual
spraying
Epidemic planning
and response
Intermittent
treatment of
pregnant women
for malaria
Tx uncomplicated
malaria
Tx of complicated
malaria
Malaria
IMCI- severe cases
Childhood
Diseases
Peer education
for vulnerable groups;
needle exchange
Tx of STIs
VCT
Outreach IMCIhome management

of fever
Specific
immunization
campaigns
Tx of severe
anemia
Antiretrovirals plus
IMCI
breast milk substitutes
for prevention of
mother-to-child
transmission
Prevention of OI,
Immunization
and Tx of
uncomplicated OI
HAART
Tx of severe OI for
AIDS
Palliative care
Blood transfusion
for HIV/AIDS
HIV/AIDS
Table 10. Examples of Intervention Delivery by Level of Care
Family planning
post partum
Antenatal and
postnatal care
Skilled birth
attendance
Emergency obstetric
care
Maternal/
Perinatal
Cessation advice;
pharmacological
therapies for
smoking
Smoking
66
School deworming
and micronutrients
Policies to reduce
indoor air pollution,
information,
regulation
School youth
programs for HIV
Maternal/
Perinatal
Higher tobacco
taxes, bans on
advertising and
promotion and clean
air laws, counter
advertising
Smoking
Note: Interventions are allocated to the level that will be the predominant service provider; other levels will often also provide specific interventions (e.g., skilled
birth attendance at hospital).
Abbreviations
OI: opportunistic infection; IMCI: integrated management of childhood illnesses; STIs: sexually transmitted infections; Tx: treatment; VCT: voluntary
counseling and testing
Food fortification
laws with iodine,
iron, folate,
potentially zinc
Improving quality of
private drug sellers
Childhood
Diseases
Condom social
marketing
Social marketing
of ITNs
HIV/AIDS
Outside health sector

or not involving direct
service delivery
Malaria
Outreach micronutrients and deworming
TB
(Outreach services)
Level of Care
Table 10 contd
67
68
DOTS treatment should take place, as well as most diagnosis and treatment of uncomplicated childhood illness, plus diagnosis and referral of
cases of severe disease. This is also the best site for treatment of uncomplicated malaria (though a significant amount of malaria treatment
appears possible in the home, given training and appropriately packaged
materials). This is also the appropriate level for the treatment of most
STIs, the treatment and prophylaxis of most opportunistic infections in
HIV/AIDS cases, and HIV testing with related counseling. Advice on quitting smoking and pharmacological interventions against tobacco addiction may be appropriate to this level, too. Health centers should provide
appropriate settings for uncomplicated births and for the administration
of nevirapine or another retroviral to reduce the risk of mother-to-child
transmission of HIV. In some situations, for example where people are
widely scattered, it will make sense to provide a further level, what we call
the health post. This will provide services such as routine immunization,
postpartum and antenatal care, and treatment with anti-malarials.
However, where population density is high, these routine services may be
provided in health centers; in more rural areas, they may be provided
through peripatetic means. A CTC health system will also include a
penumbra of outreach services radiating out from static facilities. These
activities can include, in the case of mother and child health, antenatal visits, vaccination campaigns, micronutrient programs, presumptive treatment for worms, and training in the home management of fever and of
diarrheal disease through oral rehydration. In the case of malaria, outreach can include indoor spraying and planning for coping with epidemics. Interventions also need to be delivered outside the health sector.
In the area of HIV/AIDS this is required to reach vulnerable groups with
peer education initiatives, which are the key to controlling the pandemic
in areas of low prevalence. Social marketing approaches can be employed
to increase the use of condoms and ITNs. School health programs can target particular conditions such as parasitic infections, or provide education
in sexuality to reduce the risk of transmission of HIV/AIDS. The quality
of treatments purchased from the retail sector can be improved though
measures such as training shopkeepers and social marketing of drugs,
including pre-packaging and providing easily understood treatment
advice.
Historically, one way of avoiding the problems of limited capacity
within health systems has been to adopt a vertical or categorical
approach to a particular diseasesuch as malariaor family of interven-
69
tionssuch as childhood vaccination. Such approaches have attracted a

great deal of interest from many outside donors, who appreciate the centralized technical and financial control that characterizes them and their
tendency to be more easily assessed. Many such programs have met with
great successes both within given countries and in some cases worldwide.
We would strongly advocate that categorical approaches not be dismantled; there is a great value to the concentration of expertise and commitment that drives such approaches, and we would endorse the low-income
countries maintaining or establishing national programs on HIV/AIDS,
malaria, TB, and perhaps other specific conditions, even as they build the
CTC systems.
The need for such focused expertise to advise or complement CTC
systems is evident even when the CTC systems are functioning well. It is
also important, however, to see that such categorical approaches are an
adjunct to the broader health service rather than an alternative to it.
Moreover, given that we are advocating greatly increased coverage of a
significant number of interventions, it is clearly more sensible to strengthen the health service proper to deal with these challenges than to try and
build a tangle of bypasses around it. Categorical programs can provide
technical assistance to the CTC level, standard disease protocols, qualityassured drugs, and monitoring and evaluation focused on specific outcomes, and they can help to build broad political support for the particular program. In many cases, infrastructures established by these categorical approaches are being used to control other high-priority diseases.
Many of the industry-supported global initiatives mentioned earlier, which
depend on the distribution of drugs and other commodities to large populations, have strengthened the national infrastructures needed for the
CTC delivery of interventions.
Most low-income countries will need to make substantial efforts to
scale up, especially in creating the CTC system and the necessary management support it will require. We examined in detail the constraints that
will have to be overcome in the process,91 classifying them (Table 11) into
five categories according to the realm in which they operate: the community and household level; the health services delivery level; the health sector policy and strategic management level; overall public policy issues; and
environmental characteristics. One objective is to identify the areas where
the constraints are more amenable to solution through increased financing, and those where money is less the central obstacle. The areas more
amenable to solution through increased financing are within the first two
70
Table 11. Categorization of Constraints

Levels
Constraints
Community and
Household Level
Lack of demand for effective interventions

Barriers to use of effective interventions: physical, financial, social
Health Services
Delivery Level
Shortage and distribution of appropriately qualified staff

Weak technical guidance, program management and supervision
Inadequate supplies of drugs and medical supplies
Lack of equipment and infrastructure (including labs and
communications) and poor accessibility of health services
Health Sector Policy

and Strategic
Management Level
Weak, overly centralized systems for planning and management

Weak drug policies and supply systems
Inadequate regulation of pharmaceutical and private sector and
improper industry practices
Lack of intersectoral action and partnership for health between
government and civil society
Weak incentives to use inputs efficiently and respond to user
needs and preferences
Reliance on donor funding that reduces flexibility and ownership;
donor practices that damage country policies
Public Policies
Government bureaucracy
Cutting Across Sectors Poor availability of communication and transport infrastructure
Environmental
Characteristics
A. Governance and overall policy framework

Corruption, weak government, weak rule of law and
enforceability of contracts
Political instability and insecurity
Low priority attached to social sectors
Weak structure for public accountability
Lack of free press
B. Physical environment
Climatic and geographic predisposition to disease
Physical environment unfavorable to service delivery
Source: Hanson et al.
categories, being factors that operate at the level of the community and the
system that delivers the communities health services. Constraints in the
other three levels are more centrally about governance and institutional
performance, and less about money per se. Moreover, whereas lack of
management capacity is a problem at all levels, some aspects can be more
quickly and simply addressed at the local level, and thus are an immediate
priority, whereas reforming and strengthening central government systems
requires a long-term and sustained effort.
To assess the existing constraints on a country-by-country basis, we
scored each low-income country according to a number of proxy indica-
71
tors. Indicators of constraints included: female literacy, nurses per

100,000 citizens, existing DPT3 immunization coverage, a UNICEF measure of access to health services, World Bank measures of control of corruption and government effectiveness, and the Harvard Center for
International Developments measure of the proportion of the population
living in the tropics. The analysis revealed that these vary a great deal. In
low-income countries, for example, the number of nurses per 100,000
varies from 5 to 874, and the proportion of people classed as having
access to healthcare from 18 percent to 95 percent.
Importantly, the two low- and lower-middle-income countries, where
the majority of the poorest billion liveIndia and Chinaare firmly in
the least-constrained quartile. At the other end of the spectrum, the most
severely constrained countries, making up the lowest quartile, include
Angola, Burundi, Cambodia, Central African Republic, Chad, Democratic
Republic of Congo, Eritrea, Guinea-Bissau, Haiti, Liberia, Mauritania,
Niger, Nigeria, Somalia, and Yemen. Most of these countries are in subSaharan Africa, and many are in conflict (internally or externally) or have
recently been in conflict. Many have grievous governance shortfalls. We
observe a qualitative difference between these countries and those in the
higher quartiles; in other countries, specific indicators of constraint are
much less highly correlated with each other than they are in these most
highly constrained countries.
These most-constrained countries represent the hardest cases for
intervention. They have health indicators significantly worse than those
for low-income countries as a whole: they have only a third of the number of nurses per capita, almost twice the infant mortality, and more than
twice the maternal mortality. The proportion of their population living on
less than $1 a day is twice that in other low-income countries. However,
it is important to note that in absolute terms these countries represent a
relatively small part of the problem. These are for the most part small
countries (more than half have populations below 10 million), and their
combined population is about 250 million. Despite the fact that they have
high rates of poverty, they represent only 13 percent of the total population living on less than $1 a day in low-income countries. To put it another way, 87 percent of the people living on less than $1 a day in low-income
countries do not live in the most highly constrained settings.
This analysis is rough, leaving out some countries in the quartile near
to the bottom, where constraints weigh heavily. However, it is common in
some circles to argue that nothing can be done for the poorest billion
72
because they live in countries where governance is too poor, civil society
too weak, levels of education too low, and investment in infrastructure too
nugatory for outside assistance to achieve any sustainable good. This is
not the case. As noted, though there are indeed places that appear too constrained for hope in this way, most of the poor do not live in such places,
but in countries where the situation is appreciably better. Substantial
investments in capacity building in order to address constraints will still
be required even in countries well above the lowest quartile in order for
additional funding to be used effectively.
There is an argument to be made, in fact, that a poor climate for
development in generalpoor governance, a weak economy, rampant corruption, and so onis a bit less of a hindrance to targeted health programs than to some other forms of development assistance. Smallpox
eradication required effective interventions in all countries regardless of
constraints; more recently the Onchocerciasis Control Programme (OCP)
has achieved significant goals in highly constrained settings, as has been
the case with leprosy, guinea-worm disease, Chagas disease, and other initiatives backed by robust interventions. The lesson in these cases is important: international programssupplied as global public goodswere
needed to overcome domestic barriers. Provision of health interventions at
the international scale may sometimes substitute for weak domestic political systems.
Another consideration is that conditions of high constraint are occasionally transitory. Had our analysis been carried out a few years earlier,
countries such as Uganda and Mozambique would probably have been
found among the most constrained. Today they have considerable successes to of which to boast. What we are identifying as highly constrained
countries are in many circumstances what others would refer to as complex emergencies, where the high constraints are due to exceptional circumstances. Complex emergencies are not permissive environments for
health interventions, but they are environments that require them, especially in terms of epidemic control, for malaria and for other diseases. In
those cases where the underlying governance situation improves, money
spent on categorical health programs in such situations may yield institutional capacity useful for more generalized improvements in the health
system.
Still, national governance that is marked by corruption, a lack of
planning, and a lack of concern for long-term development will undermine
the health sector as well as the rest of the economy. Countries in violent
73
conflict, or that repress ethnic or racial minorities, or that discriminate

against girls and women, will find it difficult or impossible to make sustained improvements in health sector capacity. Countries that centralize
power in authoritarian institutions and deprive local communities of
power and participation in their own affairs, including health, will also
fall far short of the potential gains. We cannot easily quantify the proportion of countries that fall into these cases: they exist, and not in small
number, alas. It would do no good to the overall effort of scaling up health
interventions if the donors put large sums into such countries, only to see
the efforts wasted and the donor taxpayers lose confidence.
Short-term macroeconomic crises can gravely damage access to
health services and upset the process of scaling up those services, unless
the sector is well insulated from short-term shocks. Donor agencies and
multilateral institutions, in concert with country officials, need to give special attention to protecting essential health interventions from budgetary
austerity that might accompany a short-run macroeconomic crisis. Donor
support can be a critical tool in that task of sustaining essential health
services during economic downturns. Preemptive efforts to formulate
social safety net schemes are equally critical to protect the poor in such situations; if households are thrown into poverty, simply maintaining the
level of essential health services that existed before the economic downturn cannot prevent adverse health effects.
Placing the Health Sector into a Broader Context of

Health Promotion
An effective health policy requires a detailed understanding of local conditionsecological, social, demographic, economic, and politicalthat all
affect health, and that need to be addressed in a public health strategy.
Important investments and behavioral changes are needed in many key
areas beyond the health sector itself (as least as traditionally defined).
Econometric estimates of health outcomes prepared for this Report
(specifically, female life expectancy in a panel of countries, 1975 to 1990)
confirm the multiple roles of health and medical services (as measured by
number of doctors per capita), household income (proxied by per capita
GNP), and ecological conditions (tropical locations adverse for health,
coastal locations favorable for health).92 Beyond the reform of the health
sector, health policy should address at least four areas.
74
(1) Underlying Infrastructure and Technology for Health

Even before the advent of some of the most potent health interventions of
the 20th century, such as immunizations and antibiotics, life expectancy
began to rise and morbidity to decline in western Europe and North
America. These gains were achieved through improvements in what Fogel
has termed the health infrastructure, including improved access to clean
water; urban sewage and garbage disposal services; pasteurized milk and
other safety precautions in food preparation and storage, and increased
nutrient intake, especially following improvements in agricultural technology and productivity; and reduced transport costs of bringing food to
urban centers. We stress that improved infrastructure is not merely the
bricks and mortar, but the know-how as well. Critical investments are
needed in technological advancement not only in biomedical approaches
but also in agriculture (e.g., nutritionally fortified crops, or higher-yielding crops), environmental management, and other areas.
(2) Ecological Conditions
Many diseases are heavily conditioned by the physical ecology of a country. Diseases depend on temperature, rainfall, availability of clean water
supplies, the presence of specific disease vectors such as mosquitoes
(which in turn are affected by climate, accident of history, biogeography),
the density of habitation (or the crowding of individuals), exposure to
environmental risks such as indoor air pollution or unsafe water, and so
forth. Islands are different from mainlands,93 temperate zones are different from tropical zones, humid regions are different from deserts, coasts
are different from hinterlands. It is not surprising that malaria has been
defeated in most temperate regions but not in large parts of the tropics; or
that Africa suffers the most intensive malaria transmission, in part because
it also has the most pernicious (or competent) mosquito vector (Anopheles gambiae). Hot environments and seasons are much more prone to
bacterial-induced diarrheal diseases than cooler regions and seasons.
Costs and strategies may differ markedly according to ecology, and intervention strategies must be tailored to local ecological conditions.94 In
some regions, insecticide-impregnated bednets might be the best vectorcontrol response to malaria; in other places, household spraying or larviciding of breeding sites might be more effective.
75
(3) Social Conditions, Including Education and Gender Equality

Social conditions matter enormously. Literacy, for example, particularly
female literacy, contributes importantly to good health. Some societies
ensure widespread literacy. Others deny literacy to girls, and still others
deny literacy to ethnic minorities or low-status social groups. Thus, ethnic
divisions, social stratification, and gender discrimination may play a large
role in the success or failure of disease control. Womens social status is a
major determinant of health outcomes. Women have been shown in many
societies to invest the households scarce economic resources in their childrens health and education than do men. The mothers literacy is critical
for almost any health interventions, whether personal behaviors or access
to the formal health care system. Once again, societies that limit girls
access to education pay a price in poorer health, and thereby in poorer
economic growth. Thus it is important to ensure that poor women and
girls have equitable access to information, services, and medicines. They
should also play an important role in the involvement of the community
and civil society that we recommend here. In sum, the MDG calling for
gender equality and empowerment of womenwhich includes but is not
limited to equality in educationis important for achieving the MDGs on
health, and for the initiative recommended here.
Sexual practices may strongly influence the patterns of spread of sexually transmitted disease. We have noted that the high prevalence of AIDS
in Africa is a result, in part, of sexual networks with significant groups of
high-risk individuals, such as male migrant workers (e.g., miners) who frequent commercial sex workers. Furthermore, womens lack of power in
sexual relations in Africa and parts of Asia may amplify the transmission
of the HIV virus. Another culturally determined factor, male circumcision
(especially prevalent in Muslim societies in Africa), may be protective
against HIV transmission, as evidenced by the lower prevalence rates in
predominantly Muslim countries in west Africa.
(4) Globalization
Globalization overall offers potential health benefits to all of the world
(Feachem 2001). A more integrated global market is likely to increase the
rate of innovation and diffusion of technological advance (for example,
through trade in health services), and this could surely serve for the common benefit of humanity. Still, the low-income countries face at least four
policy challenges arising from globalization. First, globalization has probably intensified the problem of brain drain from the poorest countries. It
76
is estimated that in the case of 20 African countriesAlgeria, Benin,

Burkina Faso, Cape Verde, Cte dIvoire, Gambia, Ghana, Guinea,
Guinea Bissau, Liberia, Mali, Mauritania, Morocco, Nigeria, Senegal,
Sierra Leone, Somalia, Sudan, Togo, and Tunisiamore than 35 percent
of nationals with a university education are now living abroad
(International Organization for Migration 2001). As Africa struggles with
the out-migration of doctors, high-income countries such as Canada and
the United States actively recruit these doctors with special inducements,
visa preferences, and advertising campaigns. Second, with increased competition for internationally mobile capital, many governments are finding
that they must lower tax rates to compete internationally for investment.
These tax cuts may, on balance, be beneficial for economic growth, but
they make it harder for governments to finance public expenditures for
health. Some countries, such as China, took decisions that required local
health centers to cover an increasing fraction of their budgets out of market revenues, thus excluding the poor from access to essential services (and
inducing these centers to oversupply drugs and other services by which
they could cover their costs). Third, globalization is most likely increasing
the pace of international transmission of diseases. Theoretical studies suggest that even modest increases in international linkages across populations (e.g., due to tourism, migration, or business travel) could substantially increase the rate of transmission of infectious diseases.95 Fourth,
globalization is undercutting many local cultural patterns, related for
example to diet and drug use. We are witnessing rapid increases in
unhealthy practices such as high-fat-content foods, increased tobacco use,
and increased use of illicit drugs (which may also be major channels for
transmitting AIDS, hepatitis C, and other blood-borne diseases).
The Supply of Global Knowledge in the Fight Against Disease

Public goods, in the broadest terms, are kinds of economic activities and
products that are undersupplied by the market, and therefore require public provision and/or financing. When public goods are local (such as police
and fire protection) or national (such as public defense), local or national
governments, respectively, are the key providers. Global Public Goods
(GPGs) are public goods that are underprovided by local and national
governments, since the benefits accrue beyond a countrys borders. The
fight against disease requires important investments in GPGs, beyond the
means or incentives of any single government and beyond the sum total of
national-level programs.
77
One of the most important kinds of public goods are those that
involve the production of new knowledge, especially through investments
in research and development (R&D). Since knowledge is non-rival,
meaning that the use of knowledge by one person does not diminish its
availability for others, it makes sense for society to ensure that new
knowledge is widely available and actually used. Yet if the fruits of R&D
are freely available, profit-maximizing firms will lack the incentive to
invest in R&D in the first place. The pragmatic approach in balancing the
need for availability of knowledge with the need for private incentives to
invest in R&D is to combine two policy instruments: public financing of
R&D in combination with patent protection for private investors in
R&D. In the United States, for example, the federally funded biomedical
research supported by the National Institutes of Health (NIH) plays a vital
role in new drug development, feeding into the R&D activities of the private pharmaceutical industry that operates under patent protection.
The division of labor in R&D between the public and private sectors
is related, at least in principle, to the nature of the knowledge that is fostered. Specifically, it is not advisable for society to grant patent rights to
basic scientific knowledge, since society benefits from the widespread use
and dissemination of basic scientific ideas.96 Thus, public support for
R&D for basic scientific research is absolutely essential. Even in the free
market United States, there is strong bipartisan support for this kind of
public spending.97 On the other hand, for specific applications of broad
scientific concepts, patent protection gives the incentive for product development and testing, which is both risky and expensive. Since patents are
given on applications rather than basic knowledge, competition among
patent holders is preserved by multiple and competing applications of the
same freely available knowledge. Viewing technological innovation as a
process going from basic science to final-product testing, public financing
should cover much of the initial stages while patent protection should provide incentives for the later stages of the process. When we turn to R&D
directed at diseases specific to the poor countries, the incentive mechanisms fail at both ends. Poor-country governments lack the means to subsidize R&D, and patent protection means little when there is no significant market at the end of the process. The result is that the R&D for diseases specific to poor countriessuch as malaria or other tropical parasitic diseasestends to be grossly underfinanced. The poor countries benefit from R&D mainly when the rich also suffer from the same diseases!98
78
It is helpful to distinguish between three types of diseases. Type I diseases are incident in both rich and poor countries, with large numbers of
vulnerable population in each. Examples of communicable diseases
include measles, hepatitis B, and Haemophilus influenzae type b (Hib),
and examples of noncommunicable diseases abound (e.g., diabetes, cardiovascular diseases, and tobacco-related illnesses). In the case of Type I
diseases, the incentives for R&D exist in the rich country markets (both
through public financing of basic science and patent protection for product development). Products get developed, and the main policy issue, vis-vis the poor countries, is access to those technologies, which tend to be
high priced and under patent protection. Many vaccines for Type I diseases have been developed in the past 20 years but have not been widely
introduced into the poor countries because of cost. Type II diseases are
incident in both rich and poor countries, but with a substantial proportion
of the cases in the poor countries. R&D incentives exist in the rich country markets, therefore, but the level of R&D spending on a global basis is
not commensurate with disease burden. HIV/AIDS and tuberculosis are
examples: both diseases are present in both rich and poor countries, but
more than 90 percent of cases are in the poor countries. In the case of vaccines for HIV/AIDS, substantial R&D is underway as a result of richcountry market demand, but not in proportion to global need or
addressed to the specific disease conditions of the poor countries. In the
case of TB the situation is even worse, with very little R&D underway for
new and better treatment. Type III diseases are those that are overwhelmingly or exclusively incident in the developing countries, such as African
sleeping sickness (trypanosomiasis) and African river blindness (onchocerciasis). Such diseases receive extremely little R&D, and essentially no commercially based R&D in the rich countries. When new technologies are
developed, they are usually serendipitous, as when a veterinary medicine
developed by Merck (ivermectin) proved to be effective in control of
onchocerciasis in humans.
Some diseases straddle two categories, particularly if treatment
and/or prevention is sensitive to distinct strains in rich and poor countries.
AIDS falls between Type I and Type II, and malaria falls between Type II
and Type III.99 Still, the basic principle that R&D tends to decline relative
to disease burden in moving from Type I to Type III diseases is a robust
empirical finding. Type II diseases are often termed neglected diseases and
Type III diseases very neglected diseases.
79
One gauge of R&D neglect is the share of total spending on a disease

relative to the global burden of disease (measured, for example, as R&D
spending per DALY100 ). Consider the case of malaria. Malaria accounts
for around 3 percent of the total global burden of disease, as measured by
disability-adjusted life years (45 million DALYs out of a world total of 1.4
billion DALYs), with more than 99 percent of the burden in the developing world. Total biomedical research of the public and private sectors is
estimated to be around $60 billion per year, or $42 per DALY. Malaria
research outlays are perhaps $100 million, or $2.2 per DALY.101 Thus, the
malaria R&D per DALY is around one-twentieth of the global average. It
is notable and disturbing that the premier public-private partnership for
developing new malaria drugs, the Malaria Medicines Venture (MMV),
currently disburses less than $10 million per year in funding, and is so limited in funding that it currently aims for only $30 million per year by
2004. The WHO, in cooperation with the international pharmaceutical
industry, has recently determined that for several important diseases of the
poor, there is currently very little private industry R&D effort despite the
scientific promise of breakthroughs in new drugs, vaccines, and diagnostics. Such neglected areas include malaria, tuberculosis, lymphatic filariasis, onchocerciasis, leishmaniasis, schistosomiasis, African trypanosomiasis and Chagas disease.102
The imbalance of research between diseases of the poor (Type II and
especially Type III diseases) and of the rich has been recognized and documented for more than a decade. A widely read report in 1990 of the
Commission on Health Research and Development noted what became
known as the 90/10 disequilibrium: that only 10 percent of R&D spending is directed at the health problems of 90 percent of the worlds population. It is interesting that the original report actually put the imbalance at
95/5, which is probably more realistic.103 This report led to the creation
in 1996 of the Global Forum for Health Research, which continues to
document the profound insufficiency of research effort on diseases of the
poor. Many initiatives have been launched or continued to address the
imbalance, but they remain profoundly underfunded. The flagship
Tropical Disease Research (TDR) program of the WHO, UNDP, and
World Bank, despite its many significant accomplishments in tropical disease control, is budgeted at only around $30 million per year to cover a
program that includes eight major tropical diseases.104 The Initiative for
Vaccine Research (IVR), a program that pulls together all of vaccine R&D
capabilities of both WHO and UNAIDS, has only around $8 million
80
Table 12. Priorities for Research and Development for New Drugs for
Poor-Country Diseases
Disease
Mortality per Year
Limitations of
Existing Drugs
New Drugs Needed; Industry

Scientific feasiblity Currently
Engaged in R&D
Malaria
12 million
Acquired drug
resistance of
existing
treatments, and
high costs of
new treatments
Yes; High
feasibility
Low, other
than in MMV
(public-private
partnership)
TB
2 million
Acquired drug
resistance, difficult
compliance
(duration and
complexity)
Yes; High
feasibility,but
with long
development
time
Low
Lymphatic
filariasis and
onchocerciasis
Few deaths, but Drugs do not kill

medium to high all stages of
social costs
parasite; rapid
reinfection
Yes; High
feasibility
Low
Leishmaniasis
57,000
Acquired drug
resistance, poor
compliance
Yes; High
feasibility
Low (except
in partnership
with TDR)
Schistosomiasis
14,000
Acquired drug
resistance
Yes; WHO
None
optimistic
about feasibility,
industry less
African
66,000
trypanosomiasis
Acquired drug
resistance, not
active against all
stages of the
disease
Yes; WHO
None
optimistic about
feasibility,
industry less
Chagas Disease
Not active against

all stages of the
disease
Yes; High
feasibility
for chronic
infection
21,000
Low to
None
Note: This table focuses on drug development rather than vaccine development, and excludes
conditions such as Shigellosis, Japanese encephalitis, and dengue, where vaccines as
opposed to drugs are likely to be most effective.
Source: WHO-IFPMA Roundtable (Table 11, Priorities Infection Diseases for which additional R&D is required).
81
annually at its disposal to accelerate the development and availability of

vaccines against no less than 13 diseases plus generic technologies to
improve immunization.105 A similar multi-agency effort in reproductive
health, entitled the Special Programme of Research, Development and
Research Training in Human Reproduction (HRP) has been budgeted at
around $20 million per year (or $40 million per biennium). More recently, several public-private partnerships have been created, often under the
initiative of the Gates and Rockefeller Foundations, to address R&D for
malaria, AIDS, and TB. The level of funding for these initiatives is still
very modest, despite being a great advance over earlier years.
The World Health Organization and the Global Forum for Health
Research should work together with the donor and research communities
to identify, on an ongoing basis, the high-priority areas of R&D for poorcountry disease conditions that are neglected by the international pharmaceutical sector. Areas recently identified as priorities include vaccines
for malaria, TB, and AIDS; microbicides for AIDS; new pesticides to control vector-borne diseases; and combination therapies for malaria needed
to slow the onset of drug resistance to anti-malaria medicines.106 Very
neglected diseases include lymphatic filariasis, leishmaniasis, schistosomiasis, trypanosomiasis, and Chagas disease. A detailed evaluation of R&D
priorities and feasibility for new drugs, undertaken by the WHO IFPMA
Roundtable, is summarized in Table 12. One of the consistent problems
with these and other tropical infectious diseases is that, even when effective treatments have existed in the past, the spread of drug resistance is
rendering the standard approaches ineffective, with few or no back-up (or
low-cost) treatments available. The need to develop improved drugs and
replacement drugs is therefore continuous. For some bacterial diseases,
such as dysentery, drug resistance has become a major impediment to
treatment. Note that Table 12 lacks mention of conditions where vaccines,
rather than drugs, are likely to be necessary, such as shigellosis, Japanese
encephalitis, and dengue, all of which are targeted by the WHO/UNAIDS
Initiative for Vaccine Research.
We believe that at least $3.0 billion per year should be allocated
toward R&D directed at the health priorities of the worlds poor. Of that
amount, $1.5 billion per year should be allocated toward targeted R&D
for new drugs, vaccines, diagnostics, and intervention strategies against
HIV/AIDS, malaria, TB, reproductive health, and other priority health
conditions of the poor. With regard to AIDS, for example, this would
include research on the use of antiretrovirals in low-income settings, vac-
82
cines for the specific viral subtypes that are prevalent in the low-income
countries, and microbicides to block the transmission of the virus.
Sustained flows of R&D support will be absolutely vital, since breakthroughs in these areas will require years of substantial investigation and
clinical trials. Both the WHO and the Global Forum for Health Research
have an important role to play in overseeing the effective allocation of
these increased funds.
In addition to targeted R&D, there is a need for greatly increased
basic scientific research in health (e.g., epidemiology, health economics,
health systems, and health policy) and biomedical topics (e.g., virology)
vis--vis the poor countries. The Commission proposes a $1.5 billion
annual expenditure for a new Global Health Research Fund (GHRF). The
GHRF would act in health and biomedical research akin to the
Consultative Group for International Agricultural Research (CGIAR) in
the area of agriculture. The GHRF would support peer-reviewed scientific research through a newly created international version of the National
Institutes of Health (NIH) in the United States and/or the Medical
Research Councils (MRC) of other countries. The NIH and the MRCs of
the OECD countries, and MRCs in countries such as Brazil, Malaysia, and
South Africa, have substantial accumulated experience in the funding of
good research and in maintaining quality, transparency, and accountability. This wealth of experience must be fully tapped in the design and creation of the new international NIH/MRC. Lessons from TDR, IVR, and
HRP must also be considered, and it may be desirable, eventually, to subsume these entities within the new structure. The existing Global Forum
for Health Research could play a useful role in the establishment and perhaps eventual operation of the Global Health Research Fund (GHRF).
A key goal of the GHRF would be to build long-term research capacity in developing countries themselves. The GHRF would provide vital
funding for research groups in low-income countries. Still, a consequential
buildup of research capacity must start with governments in low-income
countries recognizing the importance of strengthening universities and
other research-based institutions. Beyond the funding from the GHRF,
new thinking is required to overcome the ubiquitous problems of low
salary, institutional weakness, lack of peer review, and the brain-drain of
the brightest and the best to Europe and North America. Finally, the
WHO should work together with the global research-based pharmaceutical industry to operationalize technology transfer to poor countries. All
major research pharmaceutical companies should be encouraged to estab-
83
lish long-term research and training partnerships in the developing world,

following for example the recent commitment of Pfizer to establish an
Academic Alliance for AIDS Care and Prevention at Makarere University
in Uganda, which will train African doctors on the use of AIDS medicines.
In addition to these outlays, funding will be needed for operational
research as treatment efforts are scaled up in the low-income countries.
Operational research involves the investigation of health interventions in
practice, including issues of patient acceptability of treatment regimens
and adherence to those regimens, toxicity, dosing, and modes and costs of
delivery. The goal is to optimize the treatment regimen to local conditions,
and to identify how best to integrate the regimen into existing services.
The issue of operational research is typically neglected in country programs. The Commission urges bilateral agencies, the World Bank, and the
new Global Fund to Fight AIDS, Tuberculosis, and Malaria to ensure that
an adequate proportion of their country-specific project assistance is
devoted to developing research capacity and conducting operational
research on relevant topics. We suggest that a minimum of 5 percent of
project assistance should be devoted to research relevant to the project.
For example, the new Global Fund to Fight AIDS, Tuberculosis, and
Malaria should vigorously support in-country research on the evaluation
and improvement of the interventions against AIDS, TB, and malaria that
it will be funding. A second example concerns the World Bank. Most
World Bank concessional loans contain line items for operational research
relevant to the project being funded or to the preparation of a subsequent
project. Typically, these monies are either poorly spent, underspent, or
both. The Commission calls for the Bank to ensure the effective use of
these research resources, so that the necessary operational research is conducted and that local research capacity is supported and strengthened.
The Commission also supports recent discussions in the United States
and Europe to modify existing orphan drug laws to stimulate R&D activity in priority areas. Orphan drug laws traditionally provide incentives to
stimulate private sector R&D activity for the rare107 diseases that affect
a small number of people, and for which sales are not likely to turn a profit without additional incentives. These laws have been remarkably successful at attracting private-sector involvement to areas that had been previously ignored, and there is good evidence to suggest that similar mechanisms may work for diseases of the poor. Modification of existing drug
laws should place special emphasis on diseases that are exclusively concentrated in the poor tropical countries, by adjusting the particular pack-
84
age of incentives for that purpose through tax credits, research grants, and
extended patent protection.
Just as the rich countries rely both on the combination of R&D subsidies and market forces (albeit based on patents) to deliver new knowledge all the way from basic science to product development, so too the
increased subsidization of R&D should be combined with market forces
to help ensure that scientific breakthroughs find their way out of the laboratory and in to the clinics. The closest analogy to patent protection
would be a mechanism to ensure a producer of a new product that a sufficient market exists to earn a return on product development (including
the clinical trials). Although no simple institutional mechanism can be
designed for this purpose, the Commission looks favorably upon innovative proposals by which the donor world would make precommitments to
purchase new effective treatments and vaccines at a price that would merit
the investments in product development. As an example, the new Global
Alliance for Vaccines and Immunizations, which is funding vaccine purchases, could precommit to spend $10 per dose for an effective malaria,
TB, or AIDS vaccine.108 That precommitment, in combination with substantial donor funding of R&D, could persuade the pharmaceutical industry to invest much more heavily in new product development. Similarly,
the Global Fund to Fight AIDS, Tuberculosis, and Malaria could
announce precommitments to purchase new drugs against AIDS, malaria,
and TB at sufficient prices to stimulate private-sector product development. Another mechanism would be the existing orphan drug laws in the
rich countries, which give added financial incentives (e.g., tax breaks or
favorable intellectual property rights provisions) to R&D on diseases with
low incidence, such as unusual genetic disorders; this legislation could be
extended to provide similar incentives for diseases of high incidence in
poor countries and low incidence in the rich countries.
We need to harness the new information technologies to this cause as
well. The internet now makes it possible to distribute medical and scientific journal articles and other information in a low-cost, rapid manner to
all places with basic hardware and connectivity. Provision of such equipment should be an important element of any donor-supported plan for
improving health care based on modern information. The possibilities
opened up by the internet can overcome a traditional deficiency of medical researchthe difficulty of delivering information to individuals in
poor countries and those not associated with affluent institutions.
Although many journals now put their content in an electronic form, only
85
recently have some begun to release their articles to be used freely (generally after a 6-month to 2-year delay after publication) and to provide their
articles for free in the poorest countries. The recent announcement of such
actions, coordinated by the WHO and the UN, by six major publishers is
very welcome, but it falls far short of meeting enormous needs in many
countries of slightly or appreciably greater affluence, and many important
journals are not included in this initiative. For the longer run, the
Commission recommends some important and feasible goals: development of large electronic archives, where millions of articles can be stored,
accessed, and fully searched with many key words; a shift in the business
plan for most journals, so that costs are borne by advanced countries and
distribution is free, instantaneous, and worldwide via the internet; and an
agreement by all journals to release their content for free distribution,
archiving, and text searching within 6 months after publication, even if
they continue with traditional publishing practices.
Adding up the R&D components, the Commission therefore calls for
increasing R&D in six major ways: (1) $1.5 billion in annual funding
through a new Global Health Research Fund (GHRF) for basic biomedical and health research; (2) $1.5 billion in annual funding for existing
institutions that aim at new vaccine and drug development, such as TDR,
IVR, and HRP (all at WHO), and the public-private partnerships for
HIV/AIDS, malaria, and TB, and other diseases of the poor; (3) increased
outlays for operational research at the country level in conjunction with
the scaling up of essential interventions, equal to at least 5 percent of
country program funding; (4) expanded availability of free scientific
information on the internet, with donor-supported efforts to increase the
physical connectivity of universities and other research sites in the lowincome countries; (5) modification of the orphan drug legislation in the
high-income countries to include the diseases of the poor; and (6) precommitments to purchase targeted technologies (such as vaccines for
HIV/AIDS, malaria, and TB) as a market-based incentive, especially for
later-stage product development.
In addition to R&D, there are other kinds of health public goods
activities that require public subsidies, such as standard setting for public
health, disease surveillance, and the promotion of best practices in health
interventions. In the rich countries, such activities are carried out by public institutions, such as the Food and Drug Administration and the Centers
for Disease Control in the United States. In the poor countries, such activities tend to be dismally underfinanced if carried out at all. And with
86
respect to health issues that cross national borders, the World Health
Organization plays a unique role in international standard setting,109 data
gathering and analysis, disease surveillance, and the promotion of best
practices in public health through the dissemination of best international
practices. Yet in these areas, as in R&D on diseases of the poor, the level
of international funding is insufficient to the global challenge.
It is not easy to get a comprehensive picture of current spending on
global public goods through the WHO and other agencies. The WHO
budget averaged $864 million per year during 1997 to 1999, divided
almost evenly between the core budget and extra-budgetary funds. Other
international agencies (UNICEF, UNFPA, UNDP, World Bank) also provide global public goods for health in addition to country-level projects,
though the precise division between GPGs and national-level programs is
not easily determined. In view of the urgency of scaling up global public
goods in several areasdisease surveillance, epidemiological baselines,
analysis and dissemination of best practices, and training at the global
levelwe suggest a phased increase in spending on these non-R&D global public goods on the order of an extra $1 billion per year by 2007 and
an extra $2 billion by 2015, in support of the role of these and other such
agencies in the initiative proposed here.
Access to Essential Medicines

The poor lack access to essential medicines for many reasons, all of which
must be addressed in a comprehensive manner. The most important reason, by far, is poverty itself, which means that neither the poor nor their
governments can afford to purchase the essential medicines, or ensure
their proper use in well-run health systems. In addition, poor people may
be unaware of life-saving options because community outreach by the
health service is inadequate. Access is hindered by a severe shortage of
doctors and other health workers trained to select, prescribe, and use the
available medicines in an efficacious manner. Some obstacles are selfimposed. Many low-income countries impose import duties and domestic
taxes on essential medicines. Governments may also hinder access through
burdensome procurement systems and regulatory procedures that unduly
delay the use of the needed medicines.110
All of this is true even of drugs not covered by patents as well as
patent-protected drugs. For example, many antiretroviral drugs for
HIV/AIDS are not covered by patents in sub-Saharan Africa.111 Many of
the antiretroviral drugs are now available at low prices, either from gener-
87
ics producers or from US and European pharmaceutical patent-holders

that are offering the drugs on a no-profit basis. Some drugs have even been
offered for free, such as Boehringer Ingelheims offer of nevirapine to
reduce mother-to-child-transmission of HIV/AIDS. Nonetheless, in the
absence of large-scale donor support, poor countries in sub-Saharan
Africa with high HIV/AIDS prevalence have been unable to avail themselves, at any significant scale, of these lower prices. The same problems
are observed in the access to TB drugs, even those that are off patent, as
well as many vaccines that are off patent yet still too expensive for use in
the low-income countries in the absence of adequate donor financing.
When adequate donor financing is available, drug pricing by pharmaceutical companies (especially for drugs under patent) can be a significant obstacle.112 At least some essential medicines are under patent, and
others that are off patent are still supplied by only a few producers. In
such circumstances, producers tend to maintain high profit margins
(prices far above production cost), especially in their rich-country markets. Such profit margins are the basic mechanism by which R&D outlays
are recouped, and so should be recognized as part of the normal innovation process. Yet access to drugs in poor countries requires prices at or
close to production cost, since the poor (and donors on their behalf) cannot afford patent-protected prices.113 The likelihood that essential medicines will be covered by patents will increase after 2005, when all member
countries of the World Trade Organization are required to put into
force a harmonized patent system that includes pharmaceutical products.114 Moreover, in the event of a substantial increase in donor funding
for low-income countries, firms that might previously have decided
against taking out a patent for their products may decide to do so on new
drugs as a negotiating tactic vis--vis the donors. At the same time, we
should recognize that the extension of intellectual property rights is likely
to strengthen the research-based pharmaceutical industries in Brazil,
China, India, and South Africa, which can certainly be a net plus if that
increased R&D effort within the developing world is combined with special attention to the needs of the poor.
In principle, the patent-holding producers should be willing to price
discriminate between the high-income and low-income markets to enable
consumers in both markets to be served. In practice, however, the pharmaceutical companies are often reluctant to cut their prices in the lowincome countries for several reasons: (1) fear that differential prices will
undermine their prices in the high-income markets (either through the re-
88
export of cheap drugs or a backlash of consumers and politicians in the

high-income countries); (2) recognition by the companies that little or
nothing is to be gained in terms of profits by providing drugs at cost in
low-income countries; and (3) the fact that profits can actually be higher
in some low-income markets as the result of a few high-priced sales to a
narrow segment of rich customers as opposed to broad-based sales at
close-to-production cost.
The best solution will be for the global community to establish differential pricing in low-income markets as the operational norm, not the
exception.115 The pharmaceutical industry seems increasingly prepared
for such an approach, if there are sufficient assurances that low prices in
low-income markets will not undermine market pricing and patent protection in the high-income markets. Several major pharmaceutical companies holding patents on antiretrovirals for HIV/AIDS have agreed to provide their products on a no-profit basis. In a recent case, a major producer announced its intention to license voluntarily its antiretroviral
drugs.116 Several major companies responded institutionally to calls by
UNAIDS and WHO for improved access to antiretrovirals in a program
launched in May 2000 called the Accelerated Access Initiative.117 The
companies were also spurred by AIDS activists, high-visibility competition
from generics producers, and threats by Brazil and other middle-income
countries to invoke compulsory licensing to produce antiretrovirals under
patent.118 International efforts, led by WHO and its partners, have
secured price cuts in some cases of over 90 percent for the supply of drugs
to treat multidrug-resistant TB. In a new wave of public-private partnerships, these examples are augmented by many impressive cases of drug
donations to poor countries by major pharmaceutical companies for disease control efforts including African trypanosomiasis, onchocerciasis,
and malaria, and for the global elimination of leprosy, lymphatic filariasis, and blinding trachoma.119 Time-limited elimination drives have
proved especially effective in recent years in attracting donations.
The pharmaceutical industry and the international community should
now agree to a more general framework for action. The companies rightly insist that drug pricing is not the only obstacle to drug access. A complete international framework should therefore address the broad range of
problems, including donor funding for purchase and proper utilization of
the drugs, drug pricing by the pharmaceutical industry, recipient country
commitments to an appropriate regulatory regime for the utilization of
drugs, safeguards against counterfeiting and black-market re-exports of
89
discounted or donated drugs, and agreements by governments of highincome countries not to push their own demands for drug discounts in the
high-income markets on price discounts offered to low-income countries.
In our view, the best next step forward would be for WHO, the pharmaceutical industry (both patent holders and generic producers), and the
low-income countries to agree jointly to guidelines for pricing and licensing of production in low-income markets. The guidelines would provide
for transparent mechanisms of differential pricing that would target lowincome countries. The guidelines would identify, a designated set of essential medicines (e.g., for AIDS, malaria, TB, respiratory and diarrheal diseases, and vaccine-preventable diseases) to low-income countries at the
lowest viable commercial prices.120 The industry would agree to license
their technologies to producers of high-quality generics for use within lowincome countries whenever they choose not to supply those markets themselves or whenever the generics producers can demonstrate that they can
produce the drugs at high quality and at a markedly lower cost (low
enough, relative to the patent holders, to cover the costs of a modest royalty payment to the patent-holding company). The low-income countries
would undertake their own reciprocal obligations, including: (1) prevention of re-export of low-priced drugs, either legally or via the black market, to high-income countries; (2) removal of other obstacles to market
access, such as tariffs and quotas on the importation of essential medicines; (3) regulation and cooperation with the donor community to ensure
the effective use of the medicines in order to limit the onset of drug resistance or other adverse outcomes that can accompany poor administration
of medicines. The donor community, on its side, would guarantee adequate financing for the purchase, monitoring, and safe use of the drugs.
One specific mechanism would be a system of best price wins in
international tenders by donors on behalf of low-income countries. This
system calls for bidding among competing suppliers, including the patent
holder and pre-approved generics producers (with approval based on the
demonstrated ability to deliver high-quality products on the required scale
and timetable). In case the patent holder does not submit the winning bid,
the patent holder would agree to issue a voluntary license to the winner,
waive the right to litigate for patent infringement in the specific circumstance, or match the winning bid. In all cases, a winning generics supplier
would be required to pay a reasonable royalty to the patent holder, so that
the cost advantage of the generics supplier would have to be sufficient to
cover the royalty rate. Such a best-price-wins procedure could be estab-
90
lished as part of the voluntary pricing guidelines for the group of lowincome countries, and in conjunction with the obligations on the donors
and recipient countries.
In any case, voluntary arrangements need to be backed by safeguards
in case the voluntary arrangements prove difficult to implement.
Safeguards are even more essential, of course, in the unlikely case that no
voluntary guidelines can be approved at all. Assuming that a patent holder chooses neither to offer an essential medicine on a no-profit basis nor
to license the medicine to a generics producer, the low-income country will
still need a way to ensure access at low cost. The current rules on intellectual property rights in the world trading system, known as TRIPS
(trade-related intellectual property rights), envisage compulsory licensing
as such a safeguard. Under compulsory licensing, a national authority
assigns to a local producer the right to produce a patented product, and
the local producer must pay fair compensation (in the form of a royalty)
to the patent holder. Compulsory licensing is useful for the small group of
developing countries (such as Brazil, India, and South Africa) that have a
high-quality generics sector with the know-how121 and capacity to produce for the home market.
For low-income countries without local production capacity, however, compulsory licensing is of little practical value by itself.122 The
Commission therefore recommends that, for such countries, compulsory
licensing should be interpreted broadly to cover imports from a low-cost
producer in a third country. For example, low-income sub-Saharan
African countries would, in an emergency (and in the absence of voluntary
arrangements), be able to invoke a compulsory license to allow third
countries to supply low-income countries with essential medicines from a
manufacturer based, say, in South Africa or India, even if that producer
does not hold the patent and is under patent restrictions in its own homecountry market. As always, the producer would be required to pay a reasonable royalty to the patent holder, and the production would be directed only for use within the country invoking the compulsory license. The
country invoking the safeguard would be bound not to permit the production to be diverted into the international markets.
The specific suggestions that we have offered here can be combined
with other more standard approaches to ensure competitive tendering.
These include bulk purchasing arrangements, transparency in pricing
(including posted price lists for key drugs, as the industry has begun to
announce in the case of antiretrovirals), and ad hoc negotiations over
91
licenses for particular products. The Commission feels that a voluntary

pricing and licensing approach, backed by strong protection for intellectual property rights in the higher-income markets to preserve the incentives for R&D, as well as safeguards and other standard tendering devices,
could prove a workable and effective solution for all major stakeholders.
In these circumstances, it would be our hope and expectation that safeguards such as compulsory licenses would remain little used in practice. In
the event that such voluntary guidelines cannot be worked out, however,
the Commission believes that the international trade rules regarding access
to essential medicines should be applied in a manner that gives priority to
health needs of the poor. This could mean a very expansive use of compulsory licensing by developing countries to promote active competition
by high-quality generics producers, or even a delay in application of
TRIPS beyond 2005/2006 in the low-income countries if no better alternatives are present.
The bottom line is clear: the best solution is a cooperative and voluntary arrangement that would protect intellectual property rights to the
maximum extent while ensuring access of the poor to essential medicines
at the lowest possible prices through various mechanisms of differential
pricing.
The Scale of Donor Assistance

To estimate global donor needs, we began with targets for scaling up the
coverage of essential interventions, and then made estimates of the incremental costs of shifting from the current levels of coverage to the target
levels within each country. The methodology and results are summarized
in Appendix 2, and elaborated in the Background Paper on costs of
Working Group 5. Adding up all of the interventions, and including the
costs of system strengthening such as substantial additional training, management and supervision, and the costs of ensuring increased quality (such
as increased health-worker pay to ensure better motivation and performance), we arrived at a total cost per country. Since the scaling up is
assumed to take time, we estimated the increased annual costs as of 2007
and 2015. We then estimated the increase in domestic resource mobilization that each country could achieve, assuming that each country would
mobilize an additional 1 percent of GNP of budgetary revenues for health
by 2007 and 2 percent of budgetary revenues by 2015. We then took the
difference of the costs and the increased revenues, and designated this as
the net financing gap to be covered by donor assistance at country level.
92
This amount is the gap for country-level programs. There are additional
expenses regarding global public goods as well, especially R&D and the
operations of international health institutions, mainly the WHO.
The estimated gap for all country-level programs is shown in Table
A2.6 to be around $22 billion per year in 2007 (of which $14 billion
would be directed at least-developed countries, $6 billion would be directed at other low income countries, and $2 billion for low-middle-income
countries). Another $3 billion or so would be needed for increased R&D
outlays directed at biomedical and health research for low-income countries, and $2 billion for the supply of other global public goods. The total
donor assistance would then be $27 billion per year by the year 2007. This
would increase to $38 billion in 2015, as coverage is extended and especially as the number of people receiving AIDS treatment continues to rise.
Official development assistance for health would be around 0.1 percent of
donor GNP, or one penny of aid for every $10 of donor GNP. These calculations assume, of course, that the recipient countries undertake strong
domestic measures to justify and make effective use of the large increase
in donor support. Without those domestic measures, actual aid disbursements would fall short of the numbers shown in the table.
The implication is that considerably more donor financing will be
needed to achieve broad coverage of essential health interventions. But the
numbers, while big in absolute terms, are manageable. Total donor-country GNP is around $25 trillion per year (2001). Total official development
assistance (ODA) is around $53 billion, or 0.2 percent of GNP of the
donor nations (Table 13). Five donor countries subscribe to the international standard of 0.7 percent of GNP, and Ireland and the United
Kingdom are committed to raising their ODA to that level. The heads of
the IMF, World Bank, and many other donor agencies have recently
endorsed that standard once again. If all donors were to raise their ODA
to 0.7 percent of their GNP, the total ODA would be around $175 billion
per year today and $200 billion by 2007.123 This would clearly be sufficient to accommodate health assistance of some $27 billion, plus significant and warranted increases in other areas of ODA as well, especially
education, water and sanitation, environmental management, and other
urgent areas for poverty reduction and economic growth. We stress this
point because we do not believe that ODA for health should come at the
expense of ODA in other critical areas such as education. It is fair to say,
indeed, that other priority areas for social investment (education, environmental management) should also put in a claim for increased ODA. A
93
Table 13. Aid to All Recipient Countries and to Least-Developed Countries,

1999 (percent of donor-country GNP)
Country
Aid to All Recipient Countries,

percent of GNP
Aid to Least-Developed Countries,

percent of GNP
Australia
0.26
0.05
Austria
0.25
0.04
Belgium
0.30
0.07
Canada
0.28
0.05
Denmark
1.00
0.32
Finland
0.33
0.08
France
0.39
0.06
Germany
0.26
0.05
Greece
0.16
0.00
Ireland
0.32
0.12
Italy
0.15
0.03
Japan
0.34
0.06
Luxembourg
0.66
0.16
Netherlands
0.79
0.16
New Zealand
0.27
0.06
Norway
0.91
0.30
Portugal
0.26
0.12
Spain
0.23
0.03
Sweden
0.70
0.17
Switzerland
0.35
0.10
United Kingdom
0.23
0.05
United States
0.10
0.02
All Donors
0.24
0.05
Source: Calculated from Tables 31 and 39, 2000 Development Cooperation Report,
Organisation for Economic Cooperation and Development, Paris.
significant increase of ODA for the health sector should not and need not
be prejudicial to other valid claims for increased assistance. We are stressing the urgent need of ODA for health, not the case for ODA in place of
other targets of assistance.
It is important to realize just how small donor financing for health
has been relative to the size of the donor economies and the recipient
country needs. Table 14 shows the annual flows of bilateral donor support
94
Table 14. Official Development Assistance for Health and Population
Programs, Bilateral Sources, by Agency (US $ millions)

(Average 19971999)
Country
Health
Population
Total
% of GNP
United States1
535.8
920.8
0.012
Japan
338.6
21.2
359.9
0.009
United Kingdom2
267
19.3
286.3
0.023
France
184.4
1.5
185.9
0.013
Germany
385
118.6
65.7
184.3
0.009
Netherlands
80
21.5
101.4
0.026
Australia
64.8
14.9
79.6
0.021
Sweden
58.7
20.4
79.1
0.035
Spain
72.9
1.9
74.8
0.014
Belgium
58.8
1.7
60.5
0.024
Norway
41.3
15.1
56.4
0.037
Denmark
48.1
0.9
49
0.028
Austria
48.9
0.1
49
0.023
Canada
22.6
6.1
28.7
0.005
Italy
20.6
21.6
0.002
Switzerland
17.2
0.7
17.9
0.006
Finland
16
1.2
17.2
0.014
Luxembourg
16.2
0.5
16.7
0.089
Ireland
10.4
Portugal
8.6
Greece
5.8
New Zealand
3.1
0.2
1,982.4
577.5
Total 3
0.1
10.4
0.015
8.7
0.008
5.8
0.005
3.3
0.006
2,559.8
0.011
Notes: (1) Source: USAID database, covers all accounts

(2) Source DFID database
(3) All other bilaterals: from DAC online database
for health, on average, for 1997 to 1999. Total bilateral flows averaged
$2.55 billion, which represented just 0.01 percent of donor GNP. That
comes to one penny per every $100 of donor GNP! Table 15 shows development assistance targeted at specific diseases. AIDS programs received
commitments of just $287 million per year on average during 1997 to
1999, with less than half of that going to Africa.124 Malaria was funded
at $87 million and tuberculosis at just $81 million. Since these numbers
95
Table 15. Development Assistance to Health for Specific Disease Control:
Annual Average Commitments, 19971999, Selected Bilateral and

Multilateral Agencies ($US millions)
Total
World Bank
IDB
AfDB
WHO
UNICEF
DFID
USAID
Total
1,743
504
23
322
209
209
AIDS
287
145
NA
25
17
VaccinePreventable
Childhood
Diseases
251
17
NA
104
110
Malaria
87
62
NA
25
Tuberculosis
81
58
NA
17
Source: Data provided by AfDB, IADB, WB, WHO, UNICEF, DFID, and USAID.
represent the amounts specifically earmarked for these diseases, it is likely that additional unearmarked funds also went to fight these diseases.
Still, the conclusion is inescapable that donor support has been very modest compared both to donor capacity and the extent of need.
Private philanthropy by individuals, foundations, and corporations
can also play an increased role. The single most significant contribution to
global health in recent years has been the donation of more than $20 billion of personal wealth by Bill and Melinda Gates to establish the Gates
Foundation. This foundation now contributes nearly $1 billion per year to
global health initiatives. In the 20 th century, the Rockefeller Foundation
played a similar, pivotal role in global public health. Corporate philanthropy is also needed. As we noted earlier, several pharmaceutical companies have donated medicines to low-income countries, and these donations
have become the centerpiece of important global public-private partnerships for disease control, in areas including lymphatic filariasis, African
trypanosomiasis, leprosy, malaria, onchocerciasis, trachoma, mother-tochild transmission of AIDS, control of fungal infections in HIV/AIDS,
tetanus, and guinea-worm disease.
Finally, we stress that the $27 billion per year estimate is based on a
normative target for scaling up health interventions. With a bold international program, we believe that most countries can be inspired and supported to join this effort. In some countries, though, weak national leadership or implementation capacity may fail to seize the opportunity for
96
improved health services, or weak implementation capacity may mean

that proposals are not convincing. The capacity to use ODA effectively
would thereby be diminished. We interpret the $27 billion per year therefore as an upper limit of what is likely to be usable in the next few years.
Such sums must be available for the circumstance that most low-income
countries organize their own efforts to make effective use of large-scale
aid; a lack of donor assistance should not be the limiting factor in scaling
up, as has too often been the case in the past. Still, it is unlikely that all
such funds would actually be drawn.
Middle-income countries generally have the means to ensure universal coverage of essential interventions out of their domestic resources,
except in the case of a few high-prevalence HIV/AIDS countries.
Nonetheless, in scaling up health coverage, many middle-income countries
will find it convenient to obtain international loan financing and advisory
assistance. We recommend that the World Bank and the regional development banks stand prepared to offer adequate non-concessional loan assistance for the health sector for these countries. Such non-concessional
loansextended by the International Bank for Reconstruction and
Development (IBRD) at the cost of fundsis not counted as ODA.
Despite the seeming odds, we are optimistic that the needed resources
can indeed be mobilized. The Commission found evidence of rising donor
assistance for health in recent years, both in absolute dollar terms and as
a proportion of overall development assistance. Governments and their
citizens are increasingly aware of the universal threat posed by infectious
diseases and the inability of individual nations to protect their borders
against the importation of diseases, including drug-resistant forms, and
disease vectors. The worlds increased mobility and interconnectedness
mean that an outbreak or epidemic is a much wider potential threat.
Moreover, international public health crises, particularly the HIV/AIDS
pandemic and resurgent growth in TB and malaria, are receiving increased
attention at all levels of policy makers, and international health issues are
increasingly a matter of public debate in the media and popular press.
There is a growing consensus on the centrality of health objectives to
local, national, and global development, and new ideas and resources are
entering the health sector from private philanthropy as well as the private
commercial sector. The focus on issues of effective implementation
throughout this Report should provide assurance that funds will not be
used where they are not needed (bearing in mind the need, though, not to
abandon countries facing complex emergencies or other crises). Current
97
debates on the costs and benefits of globalization further contribute to

these growing concerns over health, and are giving insistence to the concept of GPGs in the heath sector. Progress on debt relief has also drawn
increased national and international attention to the challenges and
opportunities for improved performance in the health sector.
New Approaches to DonorRecipient Relations

Citizens in the rich countries will be vastly more prepared to support a
large increase in donor funding for health if they are confident that the
programs will work. A perceived lack of effectiveness is surely the greatest reason for public dislike of aid projects. Special care, therefore, is needed to raise standards for use of donor funding, and to demonstrate success
or failure of donor programs. We therefore underscore the following consideration as key to the scaling up of donor support:
Clear and quantifiable targets for coverage of health interventions
and for health outcomes
Selectivity in donor support to those countries that are helping
themselves
Transparency in the design, implementation, and evaluation of programs
Inputs to donor-supported programs from accredited experts
Independent review, and cutoff in funding to governments that fail
to perform according to commitments
Fortunately, a new donorrecipient architecture is already being put in
place as part of the increased attention to support of country-led poverty
reduction strategies. For the low-income countries, this has been formalized in the Poverty Reduction Strategy Paper (PRSP).
Meeting these goals will require not only the good will of donors and
recipient countries, but also new modalities for actually delivering the
funding. We believe that recent innovations in donor-supported global
health are promising and should be extended. The Sector-Wide
Approaches (SWAps) to health-sector scaling up have given donors and
recipient countries a new tool for bold and coordinated actions. The
Multi-Country AIDS Program of the World Bank has permitted a substantial increase in concessional financing for AIDS in Africa during 2001,
and there is no reason why the Bank could not substantially further
increase its financing for health, especially if the Banks Board consents to
the allocation of funding in the form of grants rather than loans, a step
that we respectfully recommend as realistic given the needs of the recipi-
98
ent countries. The new Global Alliance for Vaccines and Immunizations
(GAVI), backed by a substantial donation of the Bill and Melinda Gates
Foundation, has shown how a pool of international funds can stimulate
country-level leadership in scaling up health interventions (in this case,
immunizations).
The SWAp was developed during the mid-1990s as a means for
addressing many of the delivery programs of donor-supported programs.
The basic idea of the SWAp is that the donors work together with national authorities, agreeing on strategies for support, and seeking ways to pool
their assistance for a country-designed and country-led strategy. The support is negotiated at the country level (usually as part of the Consultative
Group process of donors). The success of the SWAp, at the country level,
depends on the extent to which national governments and donors are able
to subscribe to, support, and then sustain a collaborative mechanism for
assistance to the health sector. They are best suited to countries that have
commitment to, and at least moderate capacity for, implementing propoor health programs. While some commentators have concluded that the
SWAp has not introduced novel featuressuch as resource poolingin
most countries, those who work at the country level point to numerous
examples of the approach improving the synergy and effectiveness of
development assistance for health. The use of the SWAp has limited the
inevitable tendency for those who provide finance to expect to determine
how their funds are used and to get credit for that use.
The new Global Fund to Fight AIDS, Tuberculosis, and Malaria
(GFATM) can similarly provide substantial international funding for
HIV/AIDS, malaria, and TB. We endorse the key concepts that have gone
into the design of the GFATM: country-led processes, measurable results,
and public and private funding.125 Additional and complementary pools
of funds at country level will be needed for other areas of health, and for
overall health-system strengthening. Assuming, as we believe likely, that
GAVI and the GFATM live up to their great promise, additional pools of
donor funds could be mobilized for health-sector strengthening, childhood
illnesses, and other priority areas for scaling up. One realistic option
would be to expand the scope of the GFATM to disburse funding for a
wider range of concerns beyond HIV/AIDS, TB, and malaria.
In the Commissions view, the GFATM should work according to the
following broad principles:
It should provide large-scale financing only for those countries that
have prepared viable strategies.
99
It should offer small grants at the outset to enable relevant institutions within each country to prepare proposals for submission to
the GFATM.
It should encourage country proposals to reflect a national dialogue
on health delivery that engages all major stakeholders, perhaps
through the National Commission on Macroeconomics and
Health which we advocate.
It should target its financial assistance to those countries that face a
financing gap. The predominant flows should therefore be
directed at the low-income countries, especially the least-developed countries, and in the form of grants rather than
loans.126 Middle-income countries (aside from a few high
HIV/AIDS prevalence countries) should seek external financing
from the World Bank and the regional development banks rather
than from the GFATM.
It should encourage demonstrated fiscal effort on the part of recipient countries, along the lines suggested in this Report.
It should operate on principles of outcomes-based performance
standards, transparency, and ex post auditing and evaluation.
Countries that fail to deliver on previous commitments would
face reduced access to donor assistance.
It should take a hard line on corrupt use of donor funds, which
should jeopardize country access to future funding.
It should operate according to independent expert evaluations of
country proposals, with projects being evaluated according to
epidemiological needs, feasibility, cost effectiveness, and operational monitorability. Realistic budgets for these purposes will
need to be incorporated into the operation of donor-supported
projects.
It should devote a substantial amount of its annual funding, perhaps
5 percent of each countrys funding, for operational research.
In fact, these principles and approaches for the Global Fund are similar to those that guide the GAVI, the very important public-private partnership for expanded immunization coverage in poor countries that has
been underwritten primarily by the Gates Foundation.127 GAVI is an
attractive working model for the new Global Fund to Fight AIDS,
Tuberculosis, and Malaria. Key aspects of GAVI operations worth noting
include: country eligibility based upon a coherent multi-year plan presented by the country; external review of proposals by independent experts;
100
specific and monitorable performance criteria (e.g., number of immunizations delivered); and incentive-payment mechanisms (for example, half of
the payment from GAVI is made up front, and the other half is made upon
demonstration that the immunization has been carried out).
The worlds multilateral agencies, especially the World Health
Organization and the World Bank, should have special and intensified
responsibilities in the new global architecture. One hundred and ninetyone countries are the Member States that govern WHO: the Secretariat, in
responding to the mandates of these Member States, is the legitimate intergovernmental authority on global health matters. Generous voluntary
finance supplements the assessed contributions to the WHO budget, and
has enabled the organization to establish a widespread network of more
than 100 country teams, six regional offices, collaborating centers, and
headquarters in Geneva. This capacity has been developed, over the years,
as a respected locus of authoritative evidence on approaches to disease
control, the development of health systems so that they respond equitably
to peoples priorities, and the promotion of public health. WHO is the
multilateral agency, above all others, that can mobilize global expertise,
drawing upon national-level institutions in the donor countries (such as
the NIH in the United States), in recipient countries (such as the Center for
Health and Population Research in Bangladesh, formerly ICDDR,B), and
leaders from academia, the private sector, and those concerned with the
delivery of health services. The WHO should provide a technical secretariat for the Global Fund to Fight AIDS, Tuberculosis, and Malaria and
build up the capacity of its country teams so that they can better support
the application of the sector-wide approach to national or local-level
health action. This involvement of WHO would ensure the professionalism and expertise needed for success in donor-supported programs. The
WHO will also have a special role to play in establishing the evidence base
for a greatly increased disease control effort, including the epidemiological baselines that will be necessary for effective scaling up of health system
action in each country.
This enhanced role for WHO will require reforms and improvements.
In particular, the Member States should permit the WHO Secretariat to
work in more flexible partnerships with other institutions (concerns
expressed in the WHO Executive Board and the World Health Assembly
about the potential for conflict of interest have constrained this more open
way of working). The management and accountability of regional and
country-level operations should be strengthened. Given tight budget con-
101
straints, greater prioritization and focus will be required, but the budget
squeeze itself should also be eased, in line with overall increased provision
of global public goods.
The World Bank is unique in its capacity to link the health sector to
the broader development agenda. Health, we have stressed, is a central
part of the overall development agenda, but it is just one part of a much
larger effort. The World Bank is the global institution most qualified to
assist countries and the international community in linking health interventions to other aspects of the development agenda. In recent years, the
Bank has been a major provider of development assistance for health, yet
the Banks own efforts in public health are now hampered by its limited
capacity to make grants rather than loans for health-related projects in the
low-income countries.128 We therefore endorse the increased reliance on
grants for the low-income countries. At the same time, developed countries should increase their commitments and long-term contributions to
International Development Assistance (IDA) to allow the Bank to scale up
its grant programs as needed.129 In addition, the IBRD and the regional
development banks should enlarge the amount of non-concessional assistance that the Bank offers to its middle-income Member States. The World
Bank should also consider expanding its support of global public goods in
health, such as grants to TDR, IRV, and HRP, through increasing its
health-related partnerships under the Banks Development Grant Facility.
Absorbing Increased Donor Flows

The question arises as to whether a large increase in donor aid to the
health sector could be destabilizing, either in macroeconomic terms or on
a sectoral level. An analogy is sometimes made to the Dutch Disease
phenomenon, in which a resource boom (usually a commodity discovery
or rise in world commodity prices) gives rise to domestic inflation, an
overvalued exchange rate, and a squeeze on traditional exports. Could the
same occur with a large infusion of donor assistance to the health sector?
In our view, the macroeconomic magnitudes are generally not worrisome, though in cases where the aid is a large proportion of GNP, care
must be taken to accommodate the increases into the macroeconomic policy framework. In total, for the least-developed countries, incremental
donor assistance would be on the order of 6 percent of GNP, though
reaching 8 percent in the low-income sub-Saharan African countries. For
other low-income countries, the share of GDP would be much smaller
(perhaps 1 percent of GNP). Unlike a commodity boom, assistance would
102
be built up gradually over time and then sustained for a decade or more.
Moreover, half of this amount or more would fall on tradable goods, especially drugs and diagnostics, and so would not unduly or abruptly raise
demand for domestic goods. We might guess, therefore, that the rise in
demand for nontradeable output in the health sector would probably be
on the order of 3 percent of GNP. Since all of this would be externally
financed, there would be no problem with a growing budget deficit or
money creation. We should note that, for many poor developing countries,
donor assistance as a percent of GNP is vastly larger than the sums that
we are discussing. In 1999, net official development assistance for Malawi
constituted 24.6 percent of GNP, for the United Republic of Tanzania 11.3
percent of GNP, for Senegal 11.2 percent of GNP, and for Uganda 9.2 percent of GNP. All of these countries were macroeconomically stable, with
at least modest economic growth and fairly low inflation.
The bigger issue, by far, will be the capacity of the health sector itself
to absorb the increased flows. As a percent of domestic output, the value
added originating in the health sector would rise from just a couple of percent of the gross domestic product (GDP) to perhaps 6 percent or more of
the GDP.130 As discussed elsewhere in this report, in many countries this
raises issues of the quality of public administration and governance. In all
countries, this will require greatly expanded implementation capacity,
including management systems and strengthened local management
expertise, and in many cases new systems of accountability both downward to the community level and upward to the central level. Moreover,
we are assuming a substantial rise in wages of public sector health workers, to attract and retain staff and ensure good motivation and performance. This could, however, prove politically difficult to manage because of
wage demands in other parts of the public sector. The wage increase is necessary, in fact, to slow, let alone reverse, the brain drain of professionals
that is afflicting the health sectors of the low-income countries, and to
ensure that lower-level workers have salaries they can live on, but it will
still require political skill to manage.131 There needs to be a judicious
phase-in period, coupled with aggressive efforts to train new health sector
workers, and to shift as much basic health provision as possible to paramedical workers who can be more rapidly trained and who are less internationally mobile. There are steps that can be taken to help avoid the
rigidities of pay scales and terms of service associated with central government rules and regulations. These include decentralization of public
management to units with greater autonomy, raising allowances and other
103
terms of service rather than salaries per se, and greater use of private-sector and NGO providers. There will be problems, in other words, but they
will be ameliorated by a medium-term program for scaling up, one which
anticipates many of the challenges ahead.
The Macroeconomic Benefits of Scaling Up

A massive scaling up of essential health interventions should lead to a significant reduction in the burden of disease in low-income countries. The
best estimate of the combined effect of the interventions that we recommend would be to reduce total deaths in the developing world due to
infectious diseases and maternal conditions by around 8 million per year
by 2015, which would be associated with a reduction of around 330 million DALYs. The reduction in deaths is shown by comparing Table 16a
(baseline) and 16b (with scaled-up interventions), and the associated
reduction in DALYs is shown by comparing Table 17a (baseline) and 17b
(with scaled-up interventions).
Most, though not all, of these deaths would be saved in the lowincome countries; some would be saved in the middle-income countries.
At this stage we could not make separate epidemiological estimates for the
two groups because we dont have an appropriate epidemiological baseline for each country. Indeed, our estimates will require signifcant refinement in the future based on more detailed epidemioligical data and modeling.
If we take the most conservative assumption that each DALY is valued at one year of average per capita income, and that per capita income
in the low-income countries is likely to be around $563 per capita in 2015
(assuming 2 percent growth per year during 20002015), an extremely
conservative estimate of direct economic savings would be 330 million
DALYs $563 / DALY, or $186 billion per year as of 2015. More conventionally, each DALY would be valued at a multiple of annual income,
perhaps three times current income, in which case the direct benefits would
exceed $500 billion per year. Even with the very conservative assumption,
the direct benefits are nearly three times the costs of scaling up in the lowincome countries, which we estimate to be around $66 billion.
The actual benefits could be much larger than this if the benefits of
improved health help to spur economic growth, as we would expect. The
improvements in life expectancy and reduced disease burden would tend
to stimulate growth through the channels we have already discussed:
faster demographic transition (to lower fertility rates), higher investments
2,290,921
2,101,802
7,809,835
2,242,159
2,975,450
2,592,226
4,578,256
Respiratory Infections
Perinatal Conditions
Group II*
Malignant Neoplasm
Cardiovascular Diseases
Others
Group III*
5,044,311
2,985,109
3,547,716
2,814,836
9,347,660
1,934,502
2,223,810
415,081
8,974,403
13,547,795
2005
5,377,207
3,265,739
3,956,477
3,223,890
10,446,107
1,815,001
2,175,873
360,720
8,903,935
13,255,530
2010
*Groups I, II, and III are defined in detail in the World Health Report 2000, Annex Table 4, pp. 170175.
491,185
9,073,058
13,956,966
Maternal Conditions
Infectious and
Nutritional Deficiencies
Group I*
1998
Demographically Developing Regions, 19982020
5,710,104
3,546,370
4,365,239
3,632,945
11,544,553
1,695,501
2,127,937
306,360
8,833,468
12,963,265
2015
2020
6,043,000
3,827,000
4,774,000
4,042,000
12,643,000
1,576,000
2,080,000
252,000
8,763,000
12,671,000
Table 16a. Under-60 Annual Deaths from Group I, Group II, and Group III Causes, Without Interventions, WHO
104
2,290,921
2,101,802
7,809,835
2,242,159
2,975,450
2,592,226
4,578,256
Group II*
Malignant Neoplasm
Others
Group III*
5,044,311
2,949,932
2,984,297
2,198,138
8,132,367
1,475,851
1,664,462
234,334
6,489,866
9,868,714
2005
5,377,207
3,242,288
3,328,143
2,517,573
9,088,004
1,384,682
718,038
203,645
2,849,259
5,155,625
2010
491,185
9,073,058
13,956,966
Maternal Conditions
Infectious and
Group I*
1998
Developing Regions, 19982020
5,710,104
3,528,780
3,325,363
2,439,041
9,293,184
1,092,521
702,219
106,253
2,826,710
4,727,703
2015
6,043,000
3,827,000
3,636,750
2,713,667
10,177,417
1,015,519
686,400
87,400
2,804,160
4,593,479
2020
Table 16b. Under-60 Aannual Deaths from Group I, Group II, and Group III Causes, with Interventions, WHO Demographically
105
67,184,900
197,612,600
Group III*
216,174,500
299,855,000
77,738,250
54,984,000
432,577,250
64,969,750
76,813,750
15,142,250
303,295,250
460,221,000
2005
229,433,000
322,842,000
86,997,500
62,995,000
472,834,500
63,387,500
75,336,500
15,164,500
307,910,500
461,799,000
2010
267,673,200
64,775,300
Others
43,768,600
Malignant Neoplasm
376,217,100
78,881,900
Group II*
15,111,100
296,833,900
Infectious and
Maternal Conditions
458,011,800
Group I*
1998
Demographically Developing Regions, 19982020
242,691,500
345,829,000
96,256,750
71,006,000
513,091,750
61,805,250
73,859,250
15,186,750
312,525,750
463,377,000
2015
2020
255,950,000
368,816,000
105,516,000
79,017,000
553,349,000
60,223,000
72,382,000
15,209,000
317,141,000
464,955,000
Table 17a. Under-60 Annual DALYs from Group I, Group II, and Group III Causes, Without Interventions, WHO
106
67,184,900
197,612,600
Group III*
216,174,500
268,007,531
65,392,513
42,937,640
376,337,684
49,566,073
57,493,044
8,548,561
219,328,853
335,241,967
2005
229,433,000
288,986,261
73,181,286
49,193,522
411,361,070
1,384,682
24,861,045
203,645
98,531,360
124,980,732
2010
267,673,200
64,775,300
Others
43,768,600
Malignant Neoplasm
376,217,100
78,881,900
Group II*
15,111,100
296,833,900
Infectious and
Maternal Conditions
458,011,800
Group I*
1998
Developing Regions, 19982020
242,691,500
292,032,988
73,326,715
47,671,107
413,030,810
1,092,521
24,373,553
106,253
100,008,240
125,580,567
2015
255,950,000
312,007,584
80,380,250
53,049.431
445,437,265
1,015,519
23,886,060
87,400
101,485,120
126,474,099
2020
Table 17b. Under-60 Annual DALYs from Group I, Group II, and Group III Causes, With Interventions, WHO Demographically
107
108
in human capital, increased household saving, increased foreign investment, and greater social and macroeconomic stability. Because we lack
adequate epidemiological baselines, we cannot precisely translate the lives
saved into increased years of life expectancy. Still, we can offer an illustration. If the improved health outcomes raise the life expectancy of the
low-income countries by one-half of the existing 19-year gap with the
high-income countries, say from 59 years to 68 years, the effect on economic growth would be around 0.5 percent per year. Additional growth
dividends would come from reducing the burden of malaria and
HIV/AIDS, which directly impede foreign investment. Even taking just the
0.5 percent per annum estimate, per capita income of the low-income
countries would be 10 percent higher than otherwise after 20 years. Since
the GNP of the low-income countries will be around $1.8 trillion in 2020,
the 10 percent gain would amount to $180 billion per year as of
2020.132 Speaking very roughly, the annual gains from increased per capita growth are likely to be the same order of magnitude as the gains from
increased longevity (reduced DALYs). Combining the valuation of lives
saved plus faster economic growth suggests economic benefits of at least
$360 billion per year during 20152020, and possibly much larger.
Next Steps
We call on the world to commit during the coming year to a bold scaling
up of essential health services. The new PRSP process is coming into place
and should be harnessed with urgency to turn our global commitments on
poverty reduction into action. We need coordinated steps by the lowincome countries, the donor countries, and the multilateral agencies.
The Low-Income Countries
The Commission recommends that every developing country begin to map
out a path to universal access for essential health services. The starting
point is for government and civil society together to identify the essential
services to be made universally available, based on epidemiological and
economic analysis and the perceived priorities of communities. Within the
PRSP process, we recommend that each country establish in 2002 a
National Commission on Macroeconomic and Health (NCMH), chaired
by the Ministers of Finance and Health, and including leading representatives of civil society, charged with this task.133 During our own work we
have found that combining the energies, expertise, and mandates of
109
finance and health leaders is critical. The NCMH would have a limited
mandate, aiming to conclude its work by the end of 2003.
The NCMH would be assigned the following tasks: (1) identify the
priority areas for health interventions and the financing strategies to
address those priorities; (2) designate a set of essential interventions to be
made universally available to the entire population on the basis of public
financing (with the requisite donor support); (3) initiate a multi-year program of health-system strengthening, focused on service delivery at the
local level and including training, construction, and bolstering of infrastructure, and management development to enable the health sector to
achieve universal coverage of essential interventions; (4) establish quantified targets for reductions in the burden of disease based on sound epidemiological modeling; (5) identify key health synergies with other sectors
(e.g., education etc); and (6) ensure consistency of the strategy with the
overall macroeconomic framework. The NCMH would work closely with
the WHO and the World Bank in carrying out these tasks. The WHO
would help each country to establish the epidemiological baseline, to identify essential interventions, and to set quantified targets. The World Bank
would help especially in the planning of the multi-year strategy for scaling
up, including the design of a medium-term financing strategy based on
domestic and donor resources.
The Donor Countries

Donor countries would begin to mobilize annual commitments of donor
health financing of around 0.1 percent of combined GNP (approximately
$27 billion per year by 2007), to be scaled up in conjunction with country-level programs and increased provision of global public goods in
health. Actual disbursements would depend, of course, on the low-income
countries designing sound, credible, and monitorable strategies for scaling
up essential health interventions. The WHO and the World Bank, backed
by a steering group of donor and recipient countries, could be charged
with the coordination of the massive, multi-year scaling up of donor assistance in health and the monitoring of donor commitments and disbursements. Key international forums (such as the IMF/World Bank meetings,
the World Health Assembly, the UN Conference on Development Finance,
and World Banksponsored Consultative Group meetings) should provide
venues for specific commitments to scaling up of donor assistance for
health.
110
International Agencies
The global strategy will require bolstering the operations of existing international institutions such as WHO as well as creating new institutions
such as the GFATM for AIDS, malaria, and TB, and the GHRF for health
research. The WHO has a crucial role to play in several areas, most importantly advising member governments on appropriate health strategies. For
this, its on-the-ground capacity in member countries will need to be bolstered. In addition, WHO will be critical in establishing epidemiological
baselines in each country and at the world level, which will be needed as
critical inputs to global disease control efforts. The WHO and the World
Bank together have a shared responsibility in the analysis and dissemination of best practices in health systems reform as well as in giving support
for policy reforms to address existing resource imbalances in the health
sector. Finally, the IMF will be important in assisting donors and recipient
countries to take account of the scaling up process in the macroeconomic
policy framework of low-income countries, particularly with respect to
the absorption of additional international funding. In addition to the
WHO and the World Bank, the new GFATM must become operational in
2002, with adequate financing to initiate a bold process of scaling up
interventions against HIV/AIDS, malaria, and TB. Funding will have to
begin at several billion dollars per year, with a target of $8 billion per year
by 2007.
Fighting disease will be the truest test of our common capacity to
forge a true global community. There is no excuse in todays world for millions of people to suffer and die each year for lack of $34 per person needed to cover essential health services. A just and far-sighted world will not
let this tragedy continue. Leaders will follow their pledges of recent years
with the actions needed to give dignity, hope, and life itself to the worlds
poorest and most vulnerable people. We know that this can be accomplished, and we are optimistic that, in the coming year, the world will
throw its energies behind this vital and worthy task.
Notes
1.
The classifications are those used by the Development Assistance Committee of

the OECD. There are five categories: least-developed countries, or LDCs, the 48
lowest-development countries as catagorized by the United Nations; other lowincome countries or OLICs (countries with less than $755 GNP per capita in
1999 that are not LDCs); lower middle-income countries; upper middle income
countries; and high-income countries. In the costing exercise we refer to the countries in Table A2.B.
111
2.
In much of the low-income world, the age-specific death rates of many NCDs are
falling while absolute burdens are rising due to an aging population. Tobaccorelated illnesses and deaths, however, are rising even on an age-specific basis.
3.
As just one example, new mechanisms for improving access to essential drugs for
communicable diseases are beginning to be applied to cover key NCDs such as
diabetes, some forms of cancers, mental disorders, hypertension, and other NCD
conditions, but much more needs to be done for both communicable diseases and
NCDs.
4.
United Nations Development Program, Table 8, p. 169.
5.
United Nations Development Program, 2001, Feature 1.3, p. 23.
6.
For many middle-income countries, our recommendation to raise an additional 1

percent of GNP in health by 2007 and 2 percent of GNP in health by 2015 would
be more than enough to provide universal access to essential interventions. Those
countries might therefore choose to raise less than that amount in added revenues
for health, or more realistically, might choose to extend coverage beyond the
essential interventions outlined in this Report to include various non-communicable diseases that represent a growing burden on health in view of the aging of
their populations.
7.
Operational research involves the investigation of health interventions in practice, including issues of patient adherence, toxicity, dosing, and modes and costs
of delivery. The goal is to optimize the treatment regimen to local conditions, and
to identify how best to integrate the regimen into existing services. The issue of
operational research is typically neglected in country programs. We might distinguish two kinds of operational research. Clinical research involves the questions
of treatment regimens, such as dosage and toxicity. Nonclinical operational
research involves questions of logistics, financial management, cultural aspects of
treatment regimens, and other nonclinical dimensions of health-service delivery.
8.
Later in the Report we distinguish between three types of disease: Type I, which
is incident in large numbers (or at least potentially so) in both rich and poor countries; Type II, which is incident mainly in poor countries, but with a significant
number of cases in rich countries; and Type III, which is overwhelmingly or exclusively incident in poor countries. The need for special R&D stimulus applies
mainly to Type II and Type III diseases.
9.
One part of surveillance is real-time monitoring of epidemics, which now takes

place through the WHO Global Outbreak Alert and Response Network, which
interlinks 72 existing networks. Yet the absence of requisite laboratory and epidemiological capacity in many low-income countries is a weakness that requires
prompt solution.
10. Donors have called upon low-income countries to prepare a Poverty Reduction
Strategy Paper (PRSP), which is the basis for a sustained and comprehensive
attack on poverty supported by donor funding and debt cancellation.
112
11. These results are summarized in IMF, Debt Relief for Poor Countries (HIPC):
What Has Been Achieved, August 2001, http://www.imf.org/external/np/exr/
facts/povdebt.htm.
12. In addition, it is important emphasize appropriate approaches and technologies
in these related areas. For example, emphasis on the education of girls has a particularly large effect on the health of the poor. Similarly, fuel-efficient stoves represent an appropriate technology that can prevent death from indoor air pollution as well as save energy.
13. Where there is a roughly equivalent broad-based group already set up, there may
be no need to create another one, but rather to modify the existing structure to
cover the necessary tasks. We do, however, stress the advantages of having joint
direction by the finance and health ministers as a key to achieving scaling up of
health services.
14. Millions more deaths per year would be averted by a dramatic reduction in cigarette smoking as well.
15. All instances of dollar figures in this Report refer to US dollars. All cost projections are in constant-price 2002 $US.
16. The middle-income sub-Saharan African countries are included especially because
of their high HIV/AIDS prevalence, and therefore the high costs of providing
essential health interventions.
17. This amounts to an extra 1 percent of GNP in 2007 and an extra 2 percent of
GNP in 2015, though for some countries a smaller amount would be sufficient to
cover the costs of scaling up.
18. The donors are assumed to cover whatever gap remains after the mobilization of
at least 1 percent of GNP in 2007 and 2 percent of GNP in 2015. If those sums
are sufficient (or more than sufficient) to cover the total costs of scaling up, then
we assume that the donors contribute no funds.
19. We estimate that total official development assistance (ODA) for health is now
approximately $6 billion per year, including $5 billion in country programs in the
low- and middle-income countries, and approximately $1 billion on global public goods for health. In this $6 billion we are including support for the health system and specific disease control programs, but are not counting family planning,
which would add another $600 million or so to the total if it were counted in the
total. Despite an ardent effort of the Commission and Working Group 6, it is not
possible to get a precise accounting of current donor assistance for health, since
the funds are spent in a wide variety of ways and reporting inevitably involves
lags, differences in coverage and definitions across donors, and important discrepancies between commitments and disbursements. In addition to ODA, which
is comprised of grants and concessional loans, there are also nonconcessional
(market-interest-rate) loans for health, mainly from the World Bank to middle-
113
income developing countries, of around $0.5 billion per year; and R&D spending on diseases of the poor that are financed outside of ODA budgets (most likely, the sums are far below $0.5 billion).
20. Although we have confidence in the general range of our cost estimates, we urge
care not to overinterpret the detailed results by region or disease. Precise calculations of the costs of scaling up by country and disease category will have to wait
for detailed country-by-country estimation in much greater detail than the
Commission itself could undertake.
21. When an individual dies young or in the middle age, the death is associated with
many lost years of life. Also, disease can cause disability for years before eventual death. For both these reasons, DALYs lost per year are a multiple of deaths per
year.
22. Per capita income in the low-income countries is currently around $410 per person per year in 1999. With growth of per capita income equal to 2 percent per
annum, this would be $563 per year in 2015. 330 million DALYs would therefore result in a gain of $186 billion. There are good reasons to value each DALY
at a multiple of per capita income, however, so that the direct benefits could be
twice or more $186 billion. These calculations do not, furthermore, take into
account the effects of better health on faster economic growth.
23. Our analysis suggests that most middle-income countries can afford to fund
essential services out of their own domestic resources, if they demonstrate political will. Donor aid is needed overwhelmingly for low-income countries, with the
exception of some funding for middle-income countries with very high HIV/AIDS
prevalence which otherwise could not afford a comprehensive HIV/AIDS control
effort.
24. Many have asked the Commission what to do if the donor money is not made
availablein essence, how to triage with less money. We are asked to prioritize
millions of readily preventable deaths per year, since we have already narrowed
our focus to a small number of conditions that have an enormous social burden
and that have low-cost interventions that are at least partially effective. Not only
is this kind of triaging ethically and politically beyond our capacity, but it is also
exceedingly hard to do in sensible way. Those who hope for a simple answer, for
example to focus on the cheap interventions (immunizations) while putting off
the expensive interventions (higher-cost prevention programs and antiretroviral
therapy needed to fight AIDS) to a later date, misjudge the practical choices we
face. The AIDS pandemic will destroy African economic development unless controlled; to fight measles but not AIDS will not begin to meet Africas human and
economic needs. It would be wrong to go to the other extreme as well, and let the
legitimate need to fight AIDS end up starving the cheaper interventions, so we
advocate both. Moreover, the infrastructure developed to fight AIDS will support
the infrastructure needed to fight measles, especially if strengthening such com-
114

plementarities is explicitly built into the AIDS control effort. It is vastly more
fruitful to design and finance a comprehensive program that addresses many critical health needs than to pick and choose the apparently inexpensive items.
25. Presented by UNAIDS and WHO at the WHO International Consultative

Meeting on Anti-Retroviral Therapy, Geneva, May 2001.
26. Differential pricing refers to charging different prices in different markets, which
are kept separate by physical and regulatory barriers. In this case, differential
pricing would involve charging the lowest viable commercial price in the lowincome markets, and at the same time charging higher (often patent-protected)
prices in the high-income markets.
27. The participants and terms of reference of these working groups are in the
Appendix 1.
28. Sen stresses that certain substantive freedoms (the liberty of political participation or the opportunity to receive basic education or health care) are constituent components of development (essentially, end goals) as well as contributors to economic progress. See Sen (1999), Development as Freedom, especially
Introduction and Chapter 1.
29. See Amir Attaran, Health as a Human Right, CMH Policy Memorandum No.
3, http://www.cid.harvard.edu.
30. Health of the body is prosperity (Hausa Proverb); Health is great riches (English
Proverb); Without Health, no Wealth (Serbian Proverb); Health comes before
making a livelihood (Yiddish Proverb). Wolfgang Meider, Prentice-Hall
Encylopedia of World Proverbs, New York: Prentice Hall, Inc.
31. We use the term population health to mean health status at the level of whole
populations, as summarized by population measures such as life expectancy,
infant and child mortality, and disability-adjusted life years (DALYs). Economic
growth signifies a sustained rise in the per capita income of the country (typically measured as the Gross National Product (GNP) per capita adjusted for purchasing power parity). Economic development signifies a broad-based and sustained rise in the material conditions of a society, evidenced not only by GNP per
capita but also by several dimensions of material life (housing, consumption,
diversity of goods and services, and the like).
32. We salute many earlier analysts who stressed the importance of the health-todevelopment linkages. A notable example is a WHO study by Abel-Smith and
Leiserson, Poverty, Development and Health Policy (1978, especially pp. 2734),
in which the authors draw linkages from health to development that are similar
to those that we describe: the effects of diseases such as malaria, onchocerciasis,
schistosomiasis, and trypanosomiasis on limiting the exploitation of tropical
arable land; adverse effects on livestock breeding; reduced migration and trade;
delayed transition to reduced fertility; less societal openness to new methods of
cultivation; and reduced food production during epidemics. We can only concur
115
with the summary statement that What is required is a unified approach to

development to help millions of poor break out of the vicious circle of poverty,
ignorance, and ill health that encloses them and has tended to perpetuate itself
from generation to generation over the centuries (p. 32).
33. R. W. Fogel, New Findings on Secular Trends in Nutrition and Mortality: Some
Implications for Population Theory in M. R. Rosenzweig and O. Stark (eds),
Handbook of Population and Family Economics, Vol. 1a, Amsterdam, Elsevier
Science, 1997: 433481.
34. D. R. Gwatkin, Health Inequalities and the Health of the Poor: What Do We
Know? What Can We Do? Bulletin of the World Health Organization, 2000, 78
(1); and Gwatkin et al., Socio-Economic Differences in Health, Nutrition and
Population (a series of reports on 44 developing countries), World Bank, 2001.
See also S. Gupta, M. Verhoeven, and E. Tiongson, Public Spending on Health
Care and the Poor, IMF Working Paper, 2001, Table 1, for a compilation of the
data of the 44 country studies in the World Bank project.
35. It is also true, as a general matter, that at any given IMR, poorer countries had
faster growth rates than richer countries, a phenomenon in economic development known as conditional convergence. Conditional convergence reflects the
fact that, for two similarly placed countries, the poorer country has more scope
to absorb capital and technology from the global leaders, and thereby to grow
more rapidly than richer countries. On the other hand, the poorer countries may
have worse attributes (e.g., higher IMR) or worse policies, so that the tendency
toward convergence is only conditional on these other factors, not absolute.
36. Formally, the annual growth rate in these models is written as a linear function
of several variables, including the natural logarithm of LEB. The estimated coefficient on ln (LEB) is typically around 3.5. Since ln (77) = 4.34 and ln (49) = 3.89,
the growth difference is given by 3.5 (4.343.89), which equals around 1.6 percent per year.
37. Although all of the studies mentioned in this paragraph attempt to separate the
direct effects of health from a poor institutional, policy, and governance environment more generally, we recognize that further research with more refined data
often at the household, village, or regional (subnational) levelswill shed further
light on the specific effects of health versus other social conditions that may be
correlated with health.
38. Purchasing-power-parity-adjusted dollars are US dollars adjusted for the fact that
the average dollar price of goods is different (generally lower) in poor countries
than in the United States.
39. IMF, OECD, UN, The World Bank, 2000. Progress Towards the International
Development Goals: 2000 A Better World for All, Washington, DC.
116
40. The basic goal regarding poverty is to halve the proportion of people living in
extreme poverty between 1990 and 2015. Extreme poverty is defined as living
on less than $1 per day (1993 PPP $US). A related poverty goal is to halve the
number of people suffering from hunger between 1990 and 2015.
41. Roll Back Malaria, a joint undertaking of WHO, UNDP, UNICEF, and the World
Bank, aims to halve the number of deaths due to malaria by 2010. Stop TB, a
global partnership including WHO, the World Bank, and UNICEF, aims to
reduce the disease burden (prevalence and deaths) by half as of 2010 compared
with 2000.
42. The study was carried out by the State Failure Task Force, established by the
US Central Intelligence Agency in 1994. The task force gave formal definition to
state failure (as a case of revolutionary war, ethnic war, genocides, or politicides,
and adverse or disruptive regime changes), and counted all cases during
19571994 in countries of 500,000 population or more. One hundred and thirteen cases of state failure were identified. Of all explanatory variables that were
examined, three were most significant: infant mortality rates; openness of the
economy, in that greater economic linkages with the rest of the world diminish
the chances of state failure; and democracy, with democratic countries showing
less propensity to state failure than authoritarian regimes. See State Failure Task
Force, State Failure Task Force Report: Phase II Findings, in the Environmental
Change and Security Project Report of the Woodrow Wilson Center, Issue 5,
Summer 1999, 4972.
43. [V]irtually every case of U.S. military intervention abroad since 1960 has taken
place in a developing country that had previously experienced a case of state failure (J. Sachs, The Strategic Significance of Global Inequality, The Washington
Quarterly, Summer 2001, p. 191).
44. See National Intelligence Council, The Global Infectious Disease Threat and Its
Implications for the United States, (Washington, DC, January 2000), located at
http://www.cia.gov/. This report notes that, As a major hub of global travel,
immigration, and commerce with wide-ranging interests and a large civilian and
military presence overseas, the United States and its equities abroad will remain
at risk from infectious diseases, including the fact that infectious diseases are
likely to slow socioeconomic development in the hardest-hit developing and former communist countries and regions. This will challenge democratic development and transitions and possibly contribute to humanitarian emergencies and
civil conflicts. See also National Intelligence Council Report, Global Trends
2015: A Dialogue with Non-Governmental Experts, December 2000, located at
http://www.cia.gov/.
45. B. Korber et al., Science 288, 1789 (2000).
117
46. As Laver and Garman recently wrote, A worldwide epidemic (pandemic) of type
A influenza could occur any time. Such an event will be caused by a new virus
against which the human population has no immunity, and past experience indicates that this new virus will probably arise in China. With todays crowded conditions and rapid transportation, the epidemic is expected to reach every corner
of the globe. Millions of people will become ill, and many will die. Graeme
Laver and Elspeth Garman, The Origin and Control of Pandemic Influenza,
Science, Vol. 293, 7 September 2001, 17761777.
47. As just one of many examples, of 416 Tibetan refugees arriving in Canada in
1999, 5 had MDR-TB. Bonnie Henry et al., M. Tuberculosis Outbreak in
Tibetan Refugee Claimants in Canada, presented at the 5th Annual Meeting of
the International Union Against TB and Lung Disease, North American Region,
Vancouver, February 2000. (http://www.hc-sc.gc.ca/hpb/lcdc/survlnce/fetp).
48. See Chris F. Curtis, The mass effect of widespread use of insecticide-treated bednets in a community, CMH Policy Memorandum, http://www.cid.harvard.edu/.
49. Human Development Report 2001, p. 23. Similarly, 48 percent of the developing
world population is in countries that are lagging, far behind, or slipping, regarding the maternal mortality goals.
50. Avoidable disease, in the Commissions analysis, refers to the excessive morbidity and mortality in a society compared with the disease and mortality rates in a
benchmark society. Specifically, we calculate the excess disease burden in the lowincome countries in comparison with the morbidity and mortality patterns of
nonsmokers in high-income countries.
51. In economic jargon, poor health is said to reduce the utility of the individual
even if there is no change in the level of consumption of goods and services or in
the life span of the individual.
52. Such large valuations have been used in the recent economics literature. See, for
example, Cutler and Richardson (1997); Topel and Murphy (1999); Philipson
and Soares (2001); and Becker, Philipson, and Soares (2001).
53. 34.6 DALYs times 2.1 million deaths equals 72 million DALYs.
54. Technically, the econometric model in Gallup and Sachs (2001) assumes that the
growth rate of the economy d (lny)/dt is equal to a Mb lny + c Z, where lny is
the natural logarithm of per capita GNP, M measures the proportion of the population vulnerable to malaria (varying between 0 and 1.0), and Z are other determinants of growth. Empirical estimates put coefficient a at around 1.3, and coefficient b at around 2.0. This suggests that the short-run effect of malaria on
growth is 1.3 percent per year, and the long-run effect is to reduce the level of
per capita income by exp (a/b) = exp(0.65) = 0.52. That is, the per capita
income of a malarious economy is only 52 percent of the per capita income of a
non-malarious economy.
118
55. Gertler and Gruber (2001) estimate that 35 percent of the costs of serious illness
are not insured by other sources available to households (in a study based on
Indonesian data). They also find that the more severe the illness, the less households are able to insure. Households are able fully to insure the economic costs
of illnesses that do not affect physical functioning, insure 71 percent of the costs
resulting from illnesses that moderately limit an individuals ability to function
physically, but only 38 percent of the costs from illnesses that severely limit physical functioning. Their findings imply that there are nontrivial costs to the
Indonesian economy from incomplete insurance of even these very extreme health
events.
56. The Barker Hypothesis maintains that intrauterine growth retardation is associated with adult illness, including cardiovascular conditions.
57. World Health Report 1999.
58. The TFR is, roughly, the average number of children per women during her
reproductive lifetime, calculated on the basis of the age-specific fertility rates in
the country at any one time. The IMR is the number of deaths under age 1 per
1,000 live births.
59. Fertility rates tend to be lower in urban areas for several reasons: children are not
economic assets in the cities, as they are on the farm; housing costs are higher;
the opportunity cost of the mothers time may be higher; and children are more
likely to be in school, with the attendant costs of providing for their school supplies, fees, uniform, etc.
60. Since there are a rising number of workers per person, GNP per person tends to
increase even if GNP per worker remains unchanged.
61. Even if new hires are as productive as old hires, the firm must still pay substantial costs for screening and sorting new workers.
62. Gallup and Sachs, 2001 (American Journal of Tropical Medicine and Hygiene.
Special Supplement). The takeoff of growth in southern Europe follows shortly
after the postwar control of malaria. In earlier decades, the region had lagged
behind the growth of northern Europe.
63. Economist (2001): The worst way to lose talent. 8 February.
64. The list of least-developed countries is shown in Table A2.B.
65. These are (with estimated numbers of deaths per year in parentheses): polio
(720), diphtheria (5,000), pertussis (346,000), measles (888,000), tetanus including neonatal (410,000), Haemophilus influenzae b, or Hib (400,000), hepatitis B
(900,000), and yellow fever (30,000). See http://www.vaccinealliance.org/reference/globalimmchallenges.html.
66. While comparing mortality among smokers and nonsmokers in developing countries with that among only nonsmokers in rich countries, this analysis seems perhaps to exaggerate the avoidable mortality. However, there are known interven-
119
tions that can substantially reduce smoking, so it seems valid to use nonsmokers
as the baseline in an attempt to delineate the maximum conceivable improvement. This choice, as it happens, has little effect on the estimates presented here,
since we report the reduction of mortality only to, 2015 and the big reductions
in tobacco-related illnesses would necessarily come much later.
67. Eradication refers to the utter elimination of a disease from the world.
Elimination refers to a halt in transmission of an infectious organism from a
defined area. In the case of elimination, there is continuing concern over the reintroduction of the disease from another region. (See Basch 1999, p. 456).
68. For a recent chronicle of those events, see Jonathan Tucker, Scourge, New York:
Atlantic Monthly Press, 2001.
69. Smallpox vaccinations are no longer used. The same may be possible with polio,
although this point is still debated.
70. DOTS refers to a treatment regimen for tuberculosis in which the patient is
directly observed taking the anti-TB medications for at least the first 2 months of
therapy, to raise adherence. Short course refers to a 6-to-8 month regimen using
a combination of anti-TB drugs.
71. WHO, UNICEF, UNAIDS, World Bank, UNESCO, and UNFPA, Health A Key
to Prosperity: Success Stories in Developing Countries, 2000, published by the
World Health Organization.
72. Experience shows, moreover, that family planning services are most effective
when they are a part of comprehensive programs for reproductive health, that
include family planning, safe pregnancy and delivery, and the prevention and
treatment of reproductive tract infections and sexually transmitted diseases.
73. Rapid population growth has multiple and complex effects on economic development. At the household level, investments per child in education and health are
reduced when households have many children, that is, when fertility rates are
high. At the societal level, rapid rural population growth in particular puts enormous stress on the physical environment (e.g., deforestation, as forests are cut for
firewood and new farm land) and on food productivity as land-labor ratios in
agriculture decline. Desperately poor peasants are then likely to crowd cities,
leading to very high rates of urbanization, with additional adverse consequences
in congestion and in declining urban capital per person (e.g., policing services,
water and sanitation, etc).
74. The report Contraceptive Practices and the Donor Gap, by the Interim Working
Group (IWG) on Reproductive Health Commodity Security, estimates a donor
gap for contraceptives and logistics on the order of $210 million by 2015, and
roughly $100 million by 2007 (see Figure 9, p. 9 of that report). The IWG is a
collaborative effort of John Snow, Inc., Population Action International, Program
for Appropriate Technology in Health, and the Wallace Global Fund.
120
75. In Bangladesh, as the infant mortality rate came down from around 140 per
1,000 live births in 1970 to around 70 per 1,000 live births in 1995, the total fertility rate fell sharply, from 7.0 in 1970 to just 3.4 in 1990 and 3.1 in 1995. As a
result, population growth slowed markedly, from around 2.5 percent per year in
1970 to 1.5 percent per year in 1995. The government invested heavily in family
planning services; important nongovernmental organizations, such as Grameen
Bank and BRAC, contributed to improvements in the social conditions of poor
women, which in turn contributed to reduced fertility rates. Economic changes,
in particular the ongoing process of urbanization, and especially the enormous
increase in employment of young women in the export-oriented ready-made-garment sector, also led to delayed marriages of women and reduced fertility rates
within marriage.
76. Although there is a single class of virus, HIV, which causes AIDS, there is a significant degree of genetic variation in the virus within a population and especially across regions. These subtypes, or clades, may have different transmissibility,
though the evidence is not clear on this point. Some virologists have suggested
that HIV1 clade C, which is prevalent especially in southern and eastern Africa
and the Horn of Africa, may be more transmissible, and therefore more likely to
result in high levels of adult prevalence.
77. Of course the social returns of treatment go far beyond the income levels of the
patients, when we take into account the benefits for children who would otherwise be orphaned, and the many other adverse social spillovers associated with
the disease.
78. Sanjeev Gupta, Marijn Verhoeven, and Erwin Tiongson, Public Spending on
Health Care and the Poor, IMF Working Paper, 2001.
79. Because of lower prices and wages for nontraded goods and services, including
salaries in the health sector, $30 to $45 per person in low-income countries is
probably equivalent to at least $60 to $90 per year in a high-income setting.
Thus, at purchasing-power-parity prices, as are used in some analyses, the minimum cost of the essential package would probably be above $80 per person per
year, as we noted in the text.
80. The graph is shown in log scales, with the natural logarithm of per capita income
in US dollars on the x-axis and the natural logarithm of total health spending in
US dollars on the y-axis.
81. The estimate in the graph is that each 1 percent increase in income leads to a 1.15
percent increase in health spending. This means that health expenditures as a
share of income are slightly higher for rich countries than for poorer countries.
For the 44 poorest countries, with per capita income of $500 or less per year,
health spending averages 4.0 percent of income. For the 21 richest countries, with
per capita income of $20,000 or more per year, health spending averages 6.5 percent of GNP.
121
82. See Fang Jing and Xiong Qiongfen, Financial Reform and Its Impact on Health
Service in Poor Rural China, presented at the Conference on Financial Sector
Reform in China, Harvard University, September 2001. They write: Due to the
serious financial constraint, health facilities in poor counties have to rely on clinic services to earn their salaries, preventative care is largely ignoredAnother
result of the emphasis on curative services is the rapidly increasing medical expenditure and drug abuse (pp. 1314). Misra, Chaterjee, and Rao (2001) describe
the burgeoning of unqualified, rural medical practitioners. The estimated one
million illegal practitioners are said to be managing 5070% of primary consultations They note that the technical quality of the care provided in the private sector is often poorranging from poor infrastructure to inappropriate and
unethical treatment practices, to overprovision of services and exorbitant costs.
83. See Yuanli Liu and William Hsiao, Chinas Poor and Poor Policy: The Case for
Rural Health Insurance, presented at the Conference on Financial Sector
Reform in China, Harvard University, 13 September 2001. Liu and Hsiao, using
Chinas 1998 National Health Services Survey data, found that among all the
rural households living in poverty that year, 44.3 percent of these household fell
into poverty due to medical spending.
84. Without proposing a false precision on such a complex topic, it would plausible
to suggest that a well-run government of a low-income country allocate total revenues in something the following manner: total revenues, 16 percent of GNP, of
which: health, 4 percent; education, 5 percent; public administration, 2 percent;
police and defense, 2 percent; public investments (infrastructure), 2 percent; and
debt service, 1 percent. Of course, expenditures dont look much like this. Debt
servicing payments are much higher, as are defense outlays in some countries.
Education and health spending are considerably lower.
85. A summary of the voluminous literature on users fees, with widespread documentation of the fact that the poor tend to be priced out of the market for essential services, is provided by Dyna Ahrin-Tenkorang in Mobilizing Resources for
Health: The Case for User Fees Revisited, CMH Paper No. WG3: 6, 2000. A
recent paper, The Bitterest Pill of All: The Collapse of Africas Health Care
System, Save the Children UK, May 2001, provides evidence and references that
point to the same conclusion.
86. For the first 22 countries in the HIPC process, debt service savings from traditional and HIPC debt relief will be around 1.9 percent of GNP each year (p. 8,
IMF 2001). For these countries, around 40 percent of the savings are being
directed toward education, and another 25 percent are being directed toward the
health sector (p. 10, IMF 2001). Social expenditures are expected to rise by
almost twice the cash saving from the HIPC relief, suggesting that the countries
are also putting fresh domestic resources into the socials sectors (p. 10, IMF
122

2001). Debt will be reduced by about two-thirds of the original debt stock (p. 6,
IMF 2001). See IMF, Heavily Indebted Poor Countries (HIPC) Initiative: Status
of Implementation, May 25, 2001, available at http://www.imf.org/.
87. Thompson and Huber (2001), Health Expenditure Trends in OECD Countries,
19701998, HCFA Review.
88. Lower-middle-income countries average $90 per person per year in health spending, and higher-middle-income countries average $240 per person per year. These
sums are sufficient to ensure universal access to a core set of interventions.
89. There are other reasons as well. An excessive proportion of resources is directed
at high-tech tertiary services, catering to urban elites, rather than to essential
interventions needed by the poor. Also, there is simply a considerable amount of
waste and misadministration as well.
90. Loans by the World Bank Groups non-concessional window (the International
Bank for Reconstruction and Development) and by the regional development
banks are made at the cost of the borrowed funds plus a small administrative fee.
This is still at much lower interest rates and longer maturities than middle-income
borrowers would get from private financial markets.
91. See Hanson, K., K Ranson, V. Oliveira, A, Mills, Constraints to Scaling-Up
Health Interventions: A Conceptual Framework and Empirical Analysis, CMH
Working Paper Series No. WG5: 14, 2001, available at http://www.cid.harvard.edu
92. See D. Jamison and J. Wang, Female Life Expectancy in a Panel of Countries,
1975-90, policy memorandum for the CMH (http://www.cid.harvard.edu). The
authors find a striking effect of number of doctors per capita in extending life
expectancy, as well as powerful geographical effects of tropics (adverse) and
coastal proximity (favorable).
93. One important difference is that an island economy may be able to eliminate a
disease vector while a mainland economy may suffer a continuing re-introduction
of the vector over a land border with another country where the vector is not controlled.
94. Kerala, in the humid tropics, has such a surfeit of water resources that individuals have traditionally been able to bathe and rinse food extensively, and boil
water in ample quantities. This may have helped Kerala to achieve its excellent
health outcomes. In water-starved regions, these hygienic behaviors are likely to
be much more expensive, and individuals may rely on the few available water
holes, which may be pathogen-ridden as a result of the extensive human use.
95. On the other hand, the fact of globalization probably reduces the phenomenon of
virgin field epidemics, in which a new pathogen is introduced into a population that has had no prior exposure, by an invading population with long-standing exposure to the disease. This often results in devastating effects on the vir-
123
gin population. Such was the case with European introductions of smallpox,
measles, and other pathogens into the New World and Pacific Islands after 1500,
where these introductions often led to the decimation of the indigenous populations.
96. The boundary between patentable and nonpatentable discoveries is currently subject to heated debate of great significance for future scientific inquiry. On the
whole, we support a greater availability of basic, unpatented scientific knowledge
to the whole world community.
97. There is a bipartisan consensus to double NIH annual funding between 1998 and
2003, from $13 billion in FY98 to $27 billion in FY03. The budget for fiscal year
2001 is $20.3 billion.
98. Many analysts have recently made the important distinction between diseases
that are common to rich and poor countrieswhere rich-country R&D benefits
the poorand diseases that are basically exclusive to the poor countries, such as
tropical parasitic diseases, where the level of R&D tends to be minimal. See
Lanjouw (2001) for a useful analysis along these lines.
99. The ambiguity about malaria falling between Type II and Type III arises not from
incidence, but from the fact that the rich-country market for prophylaxis and
treatment for travelers and military personnel establishes a modest rich-country
interest in malaria R&D.
100. DALYs, or disability-adjusted life years, associated with a disease are the number
of life years lost because of premature mortality plus the number of life-yearequivalents lost due to chronic disability. Years lived with chronic disability are
converted into an equivalent life years lost by a conversion factor reflecting the
severity of the disability. As an example, a death of a male at age 30 is scored as
29.6 DALYs in the Global Burden of Disease study (1996, p. 17).
101. See Anderson, M. Maclean and C. Davies, 1996. Malaria Research : An Audit of
International Activity. London: Wellcome Trust.
102. See Table 10 of this Report. A useful distinction here is between diseases that
afflict both the high-income and low-income countries and diseases that afflict
overwhelmingly the low-income countries. The first category of diseases will generally attract large-scale R&D within the rich countries themselves. The lowincome countries can often piggy back on the technological advances developed for the high-income market, if they can afford to deploy the new technologies when they emerge. Examples of diseases that overlap rich and poor countries
include measles, pneumococcal infections, and hepatitis B. Examples of disease of
the poor include malaria and other tropical parasites. The second category of disease is the most neglected, since neither rich-country governments nor profit-oriented pharmaceutical companies have an incentive to invest in the necessary
R&D.
124
103. A 90/10 split would suggest that as much as $6 billion per year is directed at diseases of the poor, but adding up the known amounts for malaria, tuberculosis,
other tropical diseases, and other killer conditions in poor countries, it seems
unlikely that the world total comes anywhere close to that sum. The estimate by
the Commission on Health Research for Development was that, in 1986, $1.6 billion of $30 billion R&D worldwide was addressed to problems of the developing world. A similar study carried out at Harvard University in 1995 suggested
that, in 1992, $2 billion of a worldwide $56 billion in health research was directed at the problems of the developing world. See Global Forum for Health
Research 1999, pp. 46 and 69, for background and details.
104. TDR refers to the UNDP/World Bank/WHO Special Programme for Research
and Training in Tropical Diseases. The eight targeted diseases are (with the share
of budgeted expenditures for 19941997 in parentheses): malaria (50 percent),
onchocerciasis (5 percent), Chagas disease (6 percent), schistosomiasis (10 percent), leprosy (4 percent), African trypanosomiasis (6 percent), filariasis (8 percent), and leishmaniasis (11 percent). Activities are guided by steering committees
composed of leading independent international scientific experts. Recent accomplishments include the demonstrated effectiveness of the drug artemether against
schistosome infections, and the evidence that combination drug therapy for
malaria can produce significant gains in overall cure rates. For details, see
http://www.who.int/tdr.
105. The WHO/UNAIDS Initiative for Vaccine Research (IVR) facilitates the development and introduction of vaccines against HIV, malaria, tuberculosis, pneumococcus, rotavirus, Shigella and other diarrheal agents, serotype A and B meningococcus, human papillomavirus, dengue, Japanese encephalitis, schistosomiasis,
and leishmaniasis, and promotes the development of technologies to render
immunization simpler and safer.
106. A recent study by the WHO-IFPMA (International Federation of Pharmaceutical
Manufacturers Associations) Roundtable looked at the question of R&D priorities for diseases prevalent in poor countries. According to this study, priority
areas for increased R&D include malaria, tuberculosis, lymphatic filariasis,
onchocerciasis, leishmaniasis, schistosomiasis, African trypanosomiasis, Chagas
disease, nonspecific diarrheas, and GI nematode infestations. Malaria and tuberculosis have scientifically tractable targets for which substantially higher levels of
R&D are justified. For African trypanosomiasis, Chagas disease, and leishmaniasis, current treatments are difficult to administer, have serious side effects, and
are increasingly compromised by acquired resistance.
107. The US Orphan Drug Act (1983) defines rare disease as one that affects fewer
than 200,000 people in the United States.
125
108. For a detailed discussion, see the Synthesis Paper of Working Group 2, and
Kremer, M. Public Policies to Stimulate Development of Vaccines and Drugs for
Neglected Diseases, CMH, July 2001.
109. World health increasingly requires global norms and standards, including
International Health Regulations, the Codex Alimentarius (a WHO/FAO
Commission on food safety), the Framework Convention on Tobacco Control,
the WHO/UNICEF Code on Infant Feeding, and many other examples.
110. See the excellent brief overview of these issues in Roy Widdus, Public-Private
Partnerships for Health, Bulletin of the World Health Organization, Vol. 79,
No. 8, 2001, 713720.
111. See Amir Attaran and Lee Gillespie-White (2001, p. 286). Attaran and GillespieWhite find that only in South Africa are a large number of antiretroviral (ARV)
patented (10 of 15 ARVs), mainly by Glaxo Wellcome, which patented products
in a majority (up to 37 of 53 countries). Most ARVs in most countries are not
under patent. Of the theoretical maximum of 795 patents (15 ARVs by 53 countries), only 172 patents were taken out, or 21.6 percent of the potential. For
almost all countries, at least one standard triple combination could be obtained
without patents covering any of the three drugs, and in most of the region several standard combinations would be available without patent protection. Still,
some useful combinations are protected by patent, and this could certainly pose
a complicating factor in scaling up treatment.
112. Activists have justly argued that drug pricing is an obstacle under any conditions
of donor financing, since there are always some people in the low-income countries that are rationed out of access to essential medicines whenever prices are
kept above the lowest commercially viable price. Our point is that any largescale access to the medicines by those that need them will require large-scale
donor financing.
113. This is true even if cash-constrained donors rather than the low-income countries
themselves are buying the drugs on behalf of the poor.
114. It may be argued that, since many new products are not currently patented in
most low-income countries, the beginning of the enforcement of the TRIPS agreement will change little. We doubt this conclusion. Given the growing market in
low-income countries that will come with increased donor support, pharmaceutical companies will become more likely take out patent protection as a matter of
course, unless there are voluntary international understandings to the contrary.
115. Broad support for this conclusion was also expressed at the Workshop on
Differential Pricing and Financing of Essential Drugs, organized by WHO and
WTO, 8 to 11 April 2001, Hosbjor, Norway. As the Executive Summary of the
Conference Report states, there seemed to be a large amount of common thinking among participants on two central points: First, that differential pricing
could, and should, play an important role in ensuring access to essential drugs at
126

affordable prices, especially in poor countries, while allowing the patent system
to continue to play its role of providing incentives for research and development
into new drugs; and Second, that while affordable prices are important, actually
getting drugs, whether patented or generic, to the people who need them will
require a major financing effort, both to buy the drugs and to reinforce health
care supply systems, and that for these countries most of the additional financing
will have to come from the international community. See http://www.who.int/
medicines/library/edm_general/who-wto-hosbjor/who-wto-hosbjor.html.
116. GlaxoSmithKline Plc granted a voluntary license to Aspen Pharmacare, South

Africas largest generic company, to produce GSKs antiretroviral drugs AZT and
3TC, and Combivir, which combines the two drugs into a single pill. RPT-Glaxo
gives up rights to AIDS drugs in South Africa, Ben Hirschler, Reuters, October
8, 2001.
117. See http://www.unaids.org/acc_access/index.html. The initial five companies
involved in the Initiative were Boehringer Ingelheim, Bristol-Myers Squibb,
GlaxoSmithKline, Merck & Co., and Hoffman-LaRoche.
118. International civil society, including groups such as CPTech and Health Gap
(United States), Mdecins sans Frontires and Oxfam (Europe), Treatment Access
Campaign (South Africa), and Drug Study Group (Thailand), brought the
urgency of the pricing issue to public attention, and contributed importantly to
the recent progress on price reductions of essential medicines in low-income
countries.
119. Several international partnerships for disease control have been organized around
drug donation programs of pharmaceutical companies. These include: lymphatic
filariasis (albendazole, GlaxoSmithKline); African trypanosomiasis (eflornithine,
Aventis); leprosy (leprosy multidrug therapy, Novartis); malaria (atovaquone and
proguanil, GlaxoSmithKline); onchocerciasis (ivermectin, Merck); Trachoma
(azithromycin, Pfizer); mother-to-child transmission of HIV (nevaripine,
Boehringer Ingelheim); fungal infections in HIV/AIDS patients (fluconazole,
Pfizer). Other drug donations include oral polio vaccine (Aventis Pasteur), Hib
vaccine (Wyeth Lederle Vaccines), and hepatitis B vaccine (Merck). There are also
cases of other health products, for example autodestruct syringes for tetanus
(Becton Dickenson) and nylon filter materials for guinea-worm prevention (Du
Pont). In addition, there have been donations for training and infrastructure for
HIV/AIDS (Merck and Bristol-Myers Squibb). See Initiative on Public-Private
Partnerships for Health (IPPPH), info@ippph.org.
120. The lowest viable commercial price refers to the lowest price that makes it commercially viable to supply an incremental market on a sustained basis. This would
generally equal the marginal cost of production plus handling expenses.
127
We would expect that middle-income countries would generally pay more

than the low-income countries, but less than the rich countries. Prices in those
markets would presumably be negotiated between suppliers and purchasers (e.g.,
government agencies), with the safeguard of compulsory licensing available for
the middle-income countries. Such arrangements have recently led to the negotiation of significant price discounts for antiretrovirals in Brazil and some other
middle-income countries compared with the prices in high-income countries.
121. A compulsory license does not require that the patent holder show the local producer how to produce the product. Thus the compulsory license is useful only if
the product has been successfully reverse engineered.
122. The UN Industrial Development Organization (UNIDO) has calculated that
approximately one-third of the developing countries import 100 percent of the
medicines they consume, and an additional one-third have very limited production capacity.
123. Assuming economic growth around 2.3 percent per year (2 percent per capita, 0.3
percent population) in the high-income countries, combined donor GNP should
reach approximately $29 trillion in 2007, and $35 billion in 2015.
124. The single biggest recipient of World Bank AIDS financing during 19971999
was India, which received a $191 million concessional loan for the period 1999
to 2004.
125. Transitional Arrangements Report, meeting on the Global Fund to Fight AIDS,
Tuberculosis, and Malaria (GFATM), Brussels, 1213 July 2001.
126. Small amounts should go toward middle-income countries that for one reason or
another (e.g., extraordinary incidence of disease or large pockets of recalcitrant
poverty within the nation) are unable to cover their health needs out of national
resources. For example, because of the AIDS pandemic, South Africa should be a
recipient of funding for AIDS control.
127. http://www.vaccinealliance.org. GAVI is funded with approximately $1 billion,
including $750 million from the Gates Foundation and $250 million from donor
countries.
128. The Bank is now providing around $1.3 billion in new commitments per year in
both IDA loans (concessional) and IBRD loans (nonconcessional) and currently
has nearly $10 billion under commitment in health-sector projects. Ironically,
IDA funds are actually underspent in many cases, signaling the reluctance of
many impoverished countries to take on new debts (as opposed to grants) to
finance expanded health coverage, as well as the need for a clearer multi-year
framework for scaling up health services within which IDA financing would play
a key, sustained and predictable role.
128
129. We note that the mere conversion of IDA loans to grants would not increase the
Banks net resource transfer to the low-income countries as a group (though it
might make it easier for particular countries within the group of IDA-eligible
countries). Currently, the Bank re-lends, at concessional rates, the amounts that
it collects in debt repayments on IDA loans. It is easy to show that the net present value of resource transfers that the Bank makes through IDA are the same,
whether they are made in one-time grants or in a sequence of concessional loans
in which each new loan is made on the basis of repayments of the old loans. In
either case, the present value of net resource transfers from IDA is just equal to
the donor contributions to IDA in the first place, which backs the grants or loans.
The only way that IDA can make larger net resource transfers is for IDAs donors
to contribute more funds to IDA in the first place, a policy that we support.
130. Note that in this case we are talking about the production of health services
domestically, not the importation of health services. Thus, even if total health
outlays reach 12 percent of GNP, if half of the outlays are imported, then the
value added originating in the health sector would be 6 percent of GNP.
131. The problem of brain drain is intense. In Ghana, for example, between 1998 and
2000, the number of medical doctors in the public sector declined from 1,400 to
1,115, and public-sector nurses from 17,000 to 12,600, with brain drain and
transfer to the domestic private sector playing an important role. In general, public-sector wages of doctors and nurses in low-income countries are often less than
one-third of the wages available in the domestic private sector, and perhaps onetenth or less of the wages available in the international market if the doctor or
nurse leaves the country for a job in a high-income economy.
132. The GNP of the low-income countries is currently around $1 trillion. If we suppose a population growth of 1 percent per annum and a per capita GNP growth
of 2 percent per annum, the total GNP will grow by around 3 percent per annum.
Twenty years of 3 percent growth per year would produce an aggregate GNP of
$1.8 trillion.
133. Our experience in 2 years of work on the CMH has repeatedly demonstrated to
us the value of placing the health issues within the context of the national budget as well as national social goals. Scaling up of health therefore requires the close
collaboration of the Ministers of Health and Finance, as well as the collaboration
of these ministries with leading groups in civil society. The consultation with civil
society should include organizations representing those with the worst health
problems, including women and marginalized ethnic or other groups. A National
Commission on Macroeconomics and Health can provide an important venue for
such coordinated work. Some countries may already have national committees on
health that are part of the PRSP process, in which case these may cover the suggested functions of the NCMH, though we stress again the importance of both
Ministers of Health and Finance participating jointly in the process.
Appendix 1:
Participants, Reports, and
Working Papers for the Commission on

Participants
Commissioners
Professor Jeffrey D. Sachs (Chair)
Galen L. Stone Professor of International Trade, Harvard University, and
Director, Center for International Development at Harvard University,
Cambridge, USA
Dr. Isher Judge Ahluwalia

Director, Indian Centre for Research in International Economic Relations
Indian Centre for Research in International Economic Relations, New Delhi,
India
Dr. K. Y. Amoako
Executive Secretary, United Nations Economic Commission for Africa
United Nations Economic Commission for Africa, Addis Ababa, Ethiopia
Dr. Eduardo Aninat

(Former Minister of Finance, Chile)
Deputy Managing Director, International Monetary Fund
International Monetary Fund, Washington, DC, USA
Professor Daniel Cohen

Professor of Economics
Ecole normale suprieure, Paris, France
130
Mr. Zephirin Diabre

(Former Minister of Finance, Economy and Planning, Burkina Faso)
Associate Administrator, United Nations Development Program,
New York, USA
Dr. Eduardo Doryan

(Former Minister of Education, Costa Rica)
Special Representative of the World Bank to the United Nations
New York, USA
Professor Richard Feachem

(Former Dean, London School of Hygiene and Tropical Medicine)
Director, Institute of Global Health
University of California at San Francisco/University of California at Berkeley,
San Francisco, USA
Professor Robert W. Fogel

Professor of Economics, Center for Population Economics
University of Chicago, Chicago, USA
Professor Dean Jamison

Director, Center for Pacific Rim Studies
University of California, Los Angeles, USA
Mr. Takatoshi Kato

Senior Advisor, Bank of Tokyo-Mitsubishi Ltd.,
Tokyo, Japan
Dr. Nora Lustig

President, Universidad de las Amricas-Puebla
Cholula, Mexico
Professor Anne Mills

Head, Health Economics and Financing Program
London School of Hygiene and Tropical Medicine, London, UK
Appendix 1: Participants, Reports, and Working Papers for the Commission on

131
Dr. Thorvald Moe

(Former Chief Economic Advisor and Deputy Permanent Secretary,
Norwegian Finance Ministry)
Deputy Secretary General, Organization for Economic Co-operation and
Development
Organization for Economic Co-operation and Development, Paris, France
Dr. Manmohan Singh

(Former Minister of Finance, India)
Member of Rajya Sabha
Government of India, New Delhi, India
Dr. Supachai Panitchpakdi

(Former Deputy Minister of Commerce, Thailand)
Director-General designate
World Trade Organization
Professor Laura Tyson

Dean, The Walter A. Haas School of Business
University of California at Berkeley, Berkeley, CA, USA
Dr. Harold Varmus

President, Memorial Sloan-Kettering Cancer Center, New York, USA
Chairmans team
Dr. Dyna Arhin-Tenkorang
Senior Economist CMH & Assistant to the Chairman of the CMH
Center for International Development at Harvard University, Boston, USA/
London School of Hygiene and Tropical Medicine, London, UK
Secretariat
Dr. Sergio Spinaci
Executive Secretary of the CMH
Geneva, Switzerland
132
WG1 Health, Economic Growth, and Poverty Reduction

This working group addressed the impact of health investments on poverty reduction and economic growth.
Co-Chairs
Sir George A. O. Alleyne, Director, Pan American Health Organization,
USA
Professor Daniel Cohen, Professor of Economics, Ecole normale
suprieure, France
Members
Dr. Dyna Arhin-Tenkorang, Senior Economist & Assistant to the
Chairman of the CMH, Center for International Development at
Harvard University, USA/ London School of Hygiene and Tropical
Medicine, UK
Dr. Alok Bhargava, Department of Economics, University of Houston,
USA
Dr. David E. Bloom, Professor of Economics and Demography,
Department of Population and International Health, Harvard
University, USA
Dr. David Canning, Professor of Economics, Queens University, Belfast,
Northern Ireland
Dr. Juan A. Casas, Director of the Division of Health and Human
Development, Pan American Health Organization, USA
Dr. Angus Deaton, Professor of Economics and Public Affairs, Princeton
University, USA
Professor Dean T. Jamison, Director, Program on International Health
and Education, University of California, USA
Dr. Gerald Keusch, Associate Director of National Institutes of Health
for International Research; Director of the Fogarty International
Center, Professor of Medicine, Tufts University of Medicine, USA
Dr. Felicia Knaul, Director, Center for Social and Economic Analysis of
the Mexican Health Foundation, Mexico
Dr. Juan Luis Londoo, Engineer, Revista Dinero, Columbia
Dr. Nora Lustig, President, Universidad de las Amricas-Puebla; formerly
Senior Advisor and Chief, Poverty and Inequality, Unit of the InterAmerican Development Bank, and Director, The World Development
Report, The World Bank, USA

133
Dr. Mead Over, Senior Economist, Development Research Group, The

World Bank, USA
Professor Jeffrey D. Sachs, Professor of Economics and Director, Center
for International Development at Harvard University, USA
Dr. William Savedoff, Senior Economist, Financial Development
Division, Stop W0502, Inter-American Development Bank, USA
Professor Paul Schultz, Department of Economics, Yale University, USA
Professor Duncan Thomas, Department of Economics, University of
California, (UCLA), USA
Dr. Eva Wallstam, Director, Health and Sustainable Development, World
Health Organization, Switzerland
WG2 Global Public Goods for Health

This working group studied global public goods for health, that is,
multi-country policies, programs, and initiatives having a positive impact
on health that extends beyond the borders of any single country (e.g.,
international health research collaborations, smallpox eradication, etc).
Composed of sixteen members from academia, industry, nongovernmental organizations, and international agencies, the Working Group commissioned over twenty research papers in three major categories: research,
R&D for neglected products, and building research capacity in the developing countries; global aspects of communicable disease control and prevention; and information and dissemination of best practice.
Co-Chairs
Professor Richard Feachem, Director, Institute for Global Health,
University of California, USA
Professor Jeffrey D. Sachs, Professor of Economics and Director, Center
for International Development, Harvard University, USA
Program Director/Senior Researcher
Dr. Carol Medlin, Institute for Global Health, University of California,
USA
Members
Dr. Christian Baeza, Regional Director, Latin America and the
Caribbean STEP Program, International Labor Organization, USA
Dr. John Barton, George E. Osbourne Professor of Law, Stanford Law
School, USA
134
Dr. Seth Berkley, President and CEO, International Aids Vaccine

Initiative, USA
Dr. Win Gutteridge, Area Coordinator: Product Research and
Development, Special Program for Research and Training in Tropical
Diseases, World Health Organization, Switzerland
Professor Dean T. Jamison, Director, Program on International Health
and Education, University of California, USA
Dr. Inge Kaul, Director, Office of Development Studies, United Nations
Development Program, USA
Dr. Gerald Keusch, Associate Director of National Institutes of Health
for International Research and Director, Fogarty International Center,
USA
Dr. Ariel Pablo-Mendez, Associate Director, Health Equity, The
Rockefeller Foundation, USA
Dr. Geoffrey Lamb, Director, Finance and Resource Mobilization,
Department for International Development, The World Bank, UK
Dr. Adetokunbo O. Lucas, Adjunct Professor, Harvard University
Dr. Bernard Pcoul, Director, Access to Essential Drugs, Mdicins Sans
Frontires
Dr. Sally Stansfield, Global Health Program Officer, Gates Foundation,
USA
Dr. David Webber, Director of Economic Policy and Fellow,
International Federation of Pharmaceutical Manufacturers
Association, Switzerland
Dr. Roy Widdus, Manager, Initiative on Public-Private Partnerships for
Health, Global Forum for Health Research, Switzerland
WG3 Mobilization of Domestic Resources for Health

This Working Group assessed the economic consequences of alternative
approaches to resource mobilization for health systems and interventions
from domestic resources. This work was carried out in collaboration with
the International Monetary Fund and other institutions. It focused on how
health systems can best be financed at country level, including by reallocation of public sector budgets and by expanding the role of the nongovernmental sector. Ongoing work in the Evidence and Information for
Policy (EIP) cluster of WHO provided an important input into this
Working Group.

135
Co-Chairs
Professor Kwesi Botchwey, Director of Africa Research and Programs at
Harvard Institute for International Development and the Center for
International Development, USA
Professor Alan Tait, Professor of Economics, University of Strathclyde,
Scotland; Former Deputy Director of Fiscal Affairs, International
Monetary Fund and Former Director of IMF Office, Switzerland
Members
Medicine, UK
Dr. Guido Carrin, Senior Health Economist, World Health Organization,
Geneva, Switzerland
Professor Mukul Govindji Asher, Public Policy Program, National
University of Singapore
Mr. Sanjeev Gupta, Chief, Expenditure Policy Division, Fiscal Affairs
Department, International Monetary Fund, USA
Dr. Peter S. Heller, Deputy Director, Fiscal Affairs Department,
International Monetary Fund, USA
Dr. Martin Hensher, EU consultant in Health Economics, Health
Financing and Economics Directorate, Department of Health, South
Africa
Professor William Hsiao, K. T. Li Professor of Economics, Department
of Health Policy and Management, Harvard School of Public Health,
USA
Ms. Rima Khalef Hunaidi, Assistant Secretary General / Director of the
Regional Bureau for the Arab States, United Nations Development
Programme, USA
Dr. Juan Luis Londoo, Engineer, Revista Dinero, Columbia
Mr. Rajiv Misra, Former Secretary, Ministry of Health, Gurgaon, India
Dr. Alex Preker, Lead Economist for Health, The World Bank, USA
Dr. George Schieber, Sector Manager, Health and Social Protection, The
World Bank, Washington DC, USA
136
WG4 Health and the International Economy

This group examined trade in health services, health commodities and
health insurance; patents for medicines and Trade-Related Intellectual
Property Rights (TRIPS); international movements of risk factors; international migration of health workers; health conditions and health finance
policies as rationales for protection; and other ways that trade may be
impacting on the health sector. Ongoing work at WHO and WTO provided important inputs into this Working Group.
Chair
Dr. Isher Judge Ahluwalia, Director, Indian Centre for Research in
International Economic Relations, India
Members
Dr. Tony Culyer, Professor of Economics, University of York; Head of
Department of Economics and Related Studies; Director of Health
Development, University of York; Status-only Professor, University of
Toronto, Canada
Dr. Harvey Bale, Director-General, International Federation of
Pharmaceutical Manufacturers Association, Switzerland
Dr. John Barton, Professor of Law, Stanford Law School, USA
Dr. Calestous Juma, Director, Science, Technology and Innovation
Program, Center for International Development, Harvard University;
Research Fellow, Belfer Center for Science and International Affairs,
Harvard University, USA
Mr. Jacques van der Gaag, Professor of Development Economics, Dean
of Faculty of Economics and Econometrics, University of Amsterdam,
the Netherlands
Dr. Arvind Panagariya, Professor and Co-Director, Center for
International Economics, Department of Economics, University of
Maryland, USA
Dr. Supachai Panitchpakdi, World Trade Organization Director-General
Designate, former Deputy Prime Minister and Minister of Commerce,
Thailand
Dr. Bernard Pcoule, Project Director, Access to Essential Medicines,
Mdecins Sans Frontires
Mr. B.K. Zutshi, Former Ambassador and PR of India to GATT, consultant to Indian Council for Research on International Economic
Relations, India

137
WG5 Improving Health Outcomes of the Poor

This group examined the technical options, constraints, and costs for
mounting a major global effort to improve the health of the poor dramatically by 2015. It undertook analyses of avoidable mortality, identified
available interventions to address the key causes, reviewed evidence on
how to relax constraints, and estimated the costs of scaling up coverage of
key interventions along with the costs of the required system strengthening. It drew extensively on ongoing work within WHO, at the World
Bank, and within international schools of public health.
Co-Chairs
Professor Anne Mills, Professor, London School of Hygiene and Tropical
Medicine, UK, and CMH member
Dr. Prabhat Jha Senior Scientist, World Health Organization,
Switzerland
Members
Dr. Mushtaq Chowdhury, Head of Research and Evaluation Division,
Bangladesh Rural Advance Commission, Bangladesh
Dr. Peter Kilima, Director, International Trachoma Institute, the United
Republic of Tanzania
Dr. Jeff Koplan, Director, Centers for Disease Control, USA
Dr. Ayanda Ntsaluba, Director-General of Health Services, Department
of Health, South Africa
Mr. S. Ramasundaram, Joint Secretary, Department of Commerce, India
Dr. Sally Stansfield, Program Officer, Bill and Melinda Gates
Foundation, USA
Professor Marcel Tanner, Director, Swiss Tropical Institute, Switzerland
Dr. Jaime Galvez Tan, CEO, Friendly Care Foundation Inc, Philippines
Dr. Jorge Jimenez de la Jara, Professor, Faculty of Medicine, Chile
WG6 Development Assistance and Health
This group reviewed health implications of development assistance policies including modalities relating to debt relief. It focused on the policies
and approaches of international developmental agencies. One emphasis
was on the appropriate balance between country-specific work and support for activities that address international provision of global public
goods. The Working Group drew on ongoing work within WHO, the
138
World Bank, international schools of public health, and research units of

aid agencies.
Co-Chairs
Mr. Zephirin Diabre, Associate Administrator, United Nations
Development Program, USA
Mr. Christopher Lovelace, Director, Health, Nutrition and Population,
The World Bank, USA
Ms. Carin Norberg, Director, Democracy and Social Development,
Swedish International Development Agency, Stockholm, Sweden
Members
Medicine, UK
Dr. Ingar Bruggerman, Director, International Planned Parenthood
Federation, UK
Dr. Andrew Cassels, Senior Policy Analyst, Office of the
Director-General, World Health Organization, Switzerland
Mr. Nick Drager, Department of Health in Sustainable Development,
World Health Organization, Switzerland
Mr. Bjrn Ekman, Economist, Department for Democracy and Social
Development, Swedish International Development Cooperation
Agency, Sweden
Dr. Tim Evans, Director, Health Sciences, Rockefeller Foundation, USA
Mr. Paul Isenman, Head, Strategic Management of Development Cooperation Division, Development Cooperation Directorate, OECD,
France
Dr. Inge Kaul, Director, Office of Development Studies, United Nations
Development Programme, USA
Dr. Julian Lob-Levyt, Chief Health and Population Advisor, Department
for International Development, UK
Dr. Anders Nordstrom, Swedish International Development Cooperation
Agency, Sweden
Mr. Ingvar Theo Olsen, Norwegian Agency for Development
Cooperation, Norway
Dr. Susan Stout, Lead Implementation Specialist, World Bank, USA

139
Dr. H. Sudarshan, Director, VGKK (a health trust for indigenous people

in Karnataka), India
Dr. Audulai Issaka-Tinorgah, Former Ag. Director of Medical Services,
Ministry of Health, Ghana
Ms. Eva Wallstam, Director, Department Health In Sustainable
Development, World Health Organization, Switzerland
Biographical Sketches
Isher Judge Ahluwalia

Isher Judge Ahluwalia is Director and Chief Executive, Indian Council for
Research on International Economic Relations (ICRIER), New Delhi. A
graduate of the Delhi School of Economics and the Massachusetts
Institute of Technology, Dr. Ahluwalia has spent the last 15 years writing
books as well as articles in professional journals on the Indian economy.
Her book, Industrial Growth in India: Stagnation Since the Mid-Sixties
(Oxford University Press, 1985), received the Batheja Memorial Award
for the best book on the Indian economy in 1987. Recently, Dr. Ahluwalia
co-edited the volume Indias Economic Reforms and Development: Essays
for Manmohan Singh (Oxford University Press, 1998) with Prof. I.M.D.
Little of Oxford University.
Dr. Ahluwalia has held several important nonexecutive positions on
the boards of governors of public sector enterprises, research institutions,
and financial institutions. Among her important assignments at present
are Non Executive Director on the Board of Steel Authority of India Ltd.
(SAIL); Member, Governing Body, National Institute of Public Finance &
Policy (NIPFP); and Member, Governing Body, Institute of Economic
Growth. Dr. Ahluwalia is a member of the Planning Board of Punjab and
of the Advisory Committees to the Chief Ministers of Andhra Pradesh,
Rajasthan, and Chattisgarh.
K. Y. Amoako
Since 1995, K. Y. Amoako has been Executive Secretary of the Economic
Commission for Africa (ECA), the regional arm of the United Nations in
Africa, at the rank of Under-Secretary-General of the United Nations.
Prior to his work with the ECA, he served in the World Bank for several
years, most recently in senior positions including Director of the
Education and Social Policy Department with responsibility for providing
strategic leadership for the Banks programs on poverty reduction and
human resource development (19931995); Division Chief of the Human
Resources Operations Division for Brazil, Venezuela and Peru
(19901992); and Division Chief for Country Operations for six countries
142
in eastern Africa (19851990). K.Y. Amoako received his B.A. (Hons)

with a concentration in Economics from the University of Ghana in
Legon, and his M.A. and Ph.D. degrees in Economics from the University
of California at Berkeley.
Eduardo Aninat
Eduardo Aninat is the Deputy Managing Director of the International
Monetary Fund (IMF). Dr. Aninat was previously the Finance Minister of
Chile. He served as the Chairman of the Board of Governors of the IMF
and the World Bank in 19951996 and, for 3 years, as a member of the
Development Committee of the World Bank and the IMF, representing
Chile, Argentina, Bolivia, Peru, Uruguay, and Paraguay. Dr. Aninat previously served in a range of economic positions in the Chilean Government,
including Chief Senior Negotiator for the bilateral Canada-Chile trade
agreement, and Chief Debt Negotiator and Senior Advisor of the Central
Bank of Chile and the Ministry of Finance. He has acted as a consultant
for such international institutions as the World Bank and the InterAmerican Development Bank, and as an advisor to a number of governments on matters ranging from tax policy to debt restructuring. He was
also a member of the Board of Directors of the Institute of the Americas
and a contributing editor to its official magazine. Dr. Aninat currently
serves as the President of the Social Equity Forum (SEF). He has taught
Public Finance and Economic Development at the Pontificia Universidad
Catlica de Chile and was an Assistant Professor of Economics at Boston
University. He has an M.A. and Ph.D. in Economics from Harvard
University.
Daniel Cohen
Daniel Cohen is Professor of Economics, Universit de Paris (PanthonSorbonne) and Ecole normale suprieure, Paris. He is also a member of the
Council of Economic Analysis of the French Prime Minister, and an op-ed
columnist to Le Monde magazine. Professor Cohen was a distinguished
fellow of the Association Franaise de Sciences Economiques in 1987,
and was appointed Economist of the Year in 1997 by Le Nouvel
Economiste. From 1991 to 1998, he was the co-director of the
International Macroeconomics Programme at the Center for Economic
Policy Research (CEPR). Professor Cohen also served as a consultant to
the World Bank from 1984 to 1997. He has served as an advisor to the
Bolivian Government (along with Jeffrey D. Sachs), and was a Visiting

143
Scholar at Harvard University from 1981 to 1982. He has published several books, including Private Lending to Sovereign States, Our Modern
Times, and The Wealth of the World and the Poverty of Nations, the last
of which has been translated into 15 languages.
Zephirin Diabre
Zephirin Diabre, a national from Burkina Faso, has been the United
Nations Development Programme (UNDP) Associate Administrator since
1999. Prior to entering the UN, he held several senior public posts in his
country, serving as Advisor to the President of Burkina Faso (1998);
President of the national Economic and Social Council (19961997);
Minister of the Economy, Finance and Planning (19941996); and
Minister of Trade, Industry and Mines (19921994). Founder of the
Burkina Management Association and of the Burkina/France Business
Association, Mr. Diabre also has experience in the private sector as
Director for Human Resources of the Burkina Brewery Corporation. Mr.
Diabre was a Visiting Scholar at the Harvard Institute for International
Development and a Fellow of the Weatherhead Center for International
Affairs in 1997.
Eduardo A. Doryan
Eduardo A. Doryan is Special Representative of the World Bank to the
United Nations in New York, and was Vice President of the World Bank,
formerly heading the Human Development Network (health, nutrition,
population, education and social protection). Previously he served as the
Deputy Minister for Science and Technology, and, years later, as Minister
for Education in Costa Rica. He has been a professor both at the
University of Costa Rica and at the Central American Institute for
Business Administration (INCAE). He has a Ph.D. in Political Economy
and Government from Harvard University.
Richard G. A. Feachem
Richard G. A. Feachem is the founding Director of the Institute for Global
Health, a joint initiative of the University of California, San Francisco and
the University of California, Berkeley. He is also Professor of International
Health at UCSF and UC Berkeley. Previously, Dr. Feachem was Director
of Health, Nutrition and Population at the World Bank (19951999) and
Dean of the London School of Hygiene and Tropical Medicine
(19891995). Dr. Feachem has also worked at the Universities of New
144
South Wales and Birmingham and the World Health Organization. Dr.
Feachem has served on many boards and committees. He currently serves
on the Council of Voluntary Service Overseas, the Health Advisory
Committee of the British Council, the Board of the International AIDS
Vaccine Initiative, and the Board on Global Health of the US Institute of
Medicine. He is also the Chair of the Advisory Board of the Initiative on
Public Private Partnerships for Health, and Chair of the Foundation
Council of the Global Forum for Health Research. Since 1999, Professor
Feachem has been Editor-in-Chief of the Bulletin of the World Health
Organization. Professor Feachems interests are in international health
and development. He has published extensively in these and other fields.
He holds the following degrees: CBE, FREng, BSc, PhD, DSc (Med), FICE,
FIWEM, and Hon FFPHM.
Robert William Fogel

Robert William Fogel received his B.A. from Cornell University, his M.A.
from Columbia University, and his Ph.D., in Economics, from Johns
Hopkins University. He has held faculty positions at the University of
Rochester, Cambridge University, and Harvard University. He is currently
the Charles R. Walgreen Distinguished Service Professor of American
Institutions in the Graduate School of Business, Director of the Center for
Population Economics, and a member of the Department of Economics
and of the Committee on Social Thought at the University of Chicago. He
is also co-director of the Program on Cohort Studies at the National
Bureau of Economic Research. He received the Nobel Prize in Economics
in 1993 (with Douglas C. North). During his graduate work under Simon
Kuznets, he became interested in combining the study of economics and
history to understand long-term technological and institutional change.
Since the late 1980s, his principal research has focused on explaining the
secular decline in mortality and the changing pattern of aging over the life
cycle in the United States. The latest findings from this project are scheduled to be published in 2002 in a book entitled The Escape from Hunger
and Premature Death 1700-2100: Europe, America, and the Third World.
His other current research includes a study of the high-performing Asian
economies, research into nutrition and longevity, and historical work on
the development of the discipline of economics in the 20th century.

145
Dean T. Jamison
Dean T. Jamison has been a Professor at the University of California, Los
Angeles, since 1988. He directs UCLAs Program on Global Health and
Education, and teaches both International Health Economics and
Economics of Education. Earlier in his career, Jamison spent many years
at the World Bank where he was a Senior Economist in the Research
Department, Health Project Officer for China and for Gambia, Division
Chief for Education Policy, and Division Chief for Population, Health and
Nutrition. In 19921993, he temporarily rejoined the World Bank to
serve as lead author for the Banks 1993 World Development Report,
Investing in Health. During 19982000, Jamison was on partial leave
from UCLA to serve as Director, Economics Advisory Service at the World
Health Organization in Geneva. At present, in addition to his UCLA position, Jamison is a Fellow of the Bill and Melinda Gates Foundation and a
Senior Fellow at the Fogarty International Center of the US National
Institutes of Health. Jamison studied at Stanford (A.B. in Philosophy; M.S.
in Engineering Sciences) and at Harvard (Ph.D. in Economics, under
Nobel laureate K. J. Arrow). In 1994, he was elected to membership in the
Institute of Medicine of the US National Academy of Sciences.
Takatoshi Kato
Mr. Takatoshi Kato is currently Adviser to the President, the Bank of
Tokyo-Mitsubishi and also Visiting Professor in Asia-Pacific Studies,
Waseda University. He was also Weinberg Visiting Professor, Woodrow
Wilson School, Princeton University for the 1998/1999 school year.
Mr. Kato was Japans G7 Deputy in 19951997 as Vice Minister of
Finance for International Affairs. In his 34 years of Japanese Government
service, he assumed numerous positions, including Director-General,
International Finance Bureau (19931995) and Executive Director at the
Asian Development Bank (19851987). Mr. Kato received his L.L.B. from
Tokyo University and his M.P.A. from Woodrow Wilson School, Princeton
University.
Nora Lustig
Nora Lustig is the President of the Universidad de las Amricas-Puebla,
Mexico. Previously Dr. Lustig was the Senior Advisor and Chief of the
Poverty and Inequality Unit at the Inter-American Development Bank. She
was a Senior Fellow in the Foreign Policy Studies Program at the
Brookings Institution and was Professor of Economics at El Colegio de
146
Mexico in Mexico City. She was also a Visiting Research Scholar at the
Massachusetts Institute of Technology in 1982 and a Visiting Professor at
the University of California, Berkeley, in 1984.
Nora Lustig was co-director of the World Banks World Development
Report 2000/2001 Attacking Poverty. She was also co-founder and
President of the Latin American and Caribbean Economic Association
(LACEA) between 1998 and 1999, and is currently co-director of the
LACEA Network on Inequality, Poverty and Economic Mobility. She is a
non-Resident Senior Fellow in the Foreign Policy Studies Program at the
Brookings Institution and a Senior Associated Fellow of the InterAmerican Dialogue. Dr. Lustig is a member of the Board of the World
Institute on Development Economics Research (WIDER), of the Commission on Macroeconomics and Health at the World Health Organization,
and of the Group of Experts at the International Labor Office.
Dr. Lustig has published extensively on development economics, with
a particular focus on Latin America. Her book entitled Mexico: The
Remaking of an Economy received Choice Magazines 1994 Outstanding
Book Award. Born in Buenos Aires, Argentina, Dr. Lustig has also lived in
Mexico and the United States. She received her Ph.D. in Economics from
the University of California, Berkeley.
Anne Mills
Anne Mills is Professor of Health Economics and Policy at the London
School of Hygiene and Tropical Medicine, and Head of the Health
Economics and Financing Programme, which together with its many
research partners, has a large program of research focused on equity and
efficiency of health systems in low and middle income countries. She has
nearly 30 years of experience in health-economics related research in lowand middle-income countries, and has published widely in the fields of
health economics and policy. Her current research interests are in the
organization and financing of health systems and the economic analysis of
disease control activities, especially for malaria. She has had extensive
involvement in supporting capacity development in health economics in
low- and middle-income countries, and has acted as advisor to many multilateral and bilateral agencies.
Thorvald Moe
Thorvald Moe is one of the four Deputy Secretaries-General of the
Organisation for Economic Co-operation and Development (OECD)

147
based in Paris. Within OECD, he is, among other things, responsible for
overseeing work on education, employment, and the environment, and for
a major program of work on sustainable development in which most
OECD Directorates are working closely together. Before taking his current
appointment in 1998, Dr. Moe had been Chief Economic Adviser and
Deputy Permanent Secretary at the Norwegian Finance Ministry since
1989. From 1986 to 1989, he was Norways Ambassador to the OECD.
From 1973 to 1986, Dr. Moe served in the Finance Ministry as Deputy,
and then Director General, for the Economic Policy Department following
a period in the Budget Department. Dr. Moe has written and contributed
to several books and many papers and articles on topics including macroeconomic policies, employment policies, the effects of demographics on
economic growth to public planning and budgeting, the economics of climate change, and the relationship between environmental policies and
employment. He has been on numerous boards, commissions, and committees in Norway and internationally, including the Economic Policy
Committee of the OECD. Dr. Moe holds a B.A. in Economics from the
University of California at Los Angeles and a Ph.D. in Economics from
Stanford University.
Jeffrey D. Sachs
Jeffrey D. Sachs is the Director of the Center for International
Development at Harvard University, the Galen L. Stone Professor of
International Trade at Harvard University, former Director of the Harvard
Institute for International Development, and a Research Associate of the
National Bureau of Economic Research. Dr. Sachs serves as an economic
advisor to several governments in Latin America, eastern Europe, the
Former Soviet Union, Africa, and Asia. He was cited in The New York
Times Magazine as probably the most important economist in the
world and in a Time Magazine issue on 50 promising young leaders as
the worlds best-known economist. Sachs is the recipient of many
awards and honors, including membership in the Harvard Society of
Fellows, the American Academy of Arts and Sciences, and the Fellows of
the World Econometric Society. He received Honorary Degrees from St.
Gallen University in Switzerland, Lingnan College in Hong Kong, Iona
College in New York, and Varna Economic University in Bulgaria. In
September 1991, he was honored with the Frank E. Seidman Award in
Political Economy. He has delivered the prestigious Lionel Robbins
Memorial Lectures at the London School of Economics, the John Hicks
148
Lectures at Oxford University, the David Horowitz Lectures in Tel Aviv,

the Frank D. Graham Lectures at Princeton University, and the Tanner
Lectures at the University of Utah. Dr. Sachs received his B.A., summa
cum laude, from Harvard College in 1976, and his M.A. and Ph.D. from
Harvard University in 1978 and 1980, respectively. He joined the Harvard
faculty as an Assistant Professor in 1980, and was promoted to Associate
Professor in 1982 and Full Professor in 1983. He is currently Chair of the
Commission on Macroeconomics and Health of the World Health
Organization for the years 20002001, and from September 1999 through
March 2000, he served as a member of the International Financial
Institutions Advisory Commission established by the US Congress.
Manmohan Singh
Manmohan Singh is currently the Leader of Opposition, Rajya Sabha
(Council of States) Parliament of India. He has previously served in many
other positions of the Indian Government, including Finance Minister,
Advisor to the Prime Minister of India on Economic Affairs, Secretary,
Ministry of Finance and Governor of the Reserve Bank of India, Deputy
Chairman of Indian Planning Commission, and Chief Economic Adviser
to Indias Ministry of Finance. Dr. Singh has also received a number of
awards, including the Justice K. S. Hegde Foundation Award, the Nikkei
Asia Prize for Regional Growth, and the Jawaharlal Nehru Birth
Centenary Award of the Indian Science Congress Association. He garnered the 1993 Euromoney Award for Finance Minister of the Year, and
twice received the Asiamoney Award for Finance Minister of the Year
(1993, 1994). Dr. Singh has been presented with a number of honorary
degrees from institutions all over the world. He holds a B.A. and M.A. in
Economics from Punjab and Cambridge Universities and a D.Phil from the
University of Oxford.
H. E. Supachai Panitchpakdi
Supachai Panitchpakdi is currently the Director-General Designate of the
World Trade Organization. Dr. Supachai Panitchpakdi was formerly the
Deputy Prime-Minister and Minister of Commerce for Thailand. He has
also held various positions in the private sector, such as the President of
the Thai Military Bank, Chairman of Nava Finance and Securities, and
Chairman of the Commercial Union. Dr. Supachai Panitchpakdi received
his Masters Degree and Ph.D. in Econometrics and Development
Planning from Erasmus University in Rotterdam, The Netherlands. In

149
1973, he was a Visiting Fellow to the Department of Econometrics at

Cambridge University.
Laura Tyson
Dr. Laura Tyson is the current Dean of the Walter A. Haas School of
Business at the University of California, Berkeley, and, in December 2001,
will become Dean of the London School of Business. Tyson joined the UC
Berkeley faculty in 1977 and currently holds the Class of 1939 Chair in
Economics and Business Administration. She took leave from UC Berkeley
in 1993, when President Clinton appointed her chairman of the White
House Council of Economic Advisors. She was the first woman to hold
that post. In 1995, Tyson succeeded Robert Rubin as National Economic
Advisor. In accepting that position, Tyson became the highest-ranking
woman in the Clinton White House. Tyson is the author of Whos Bashing
Whom? Trade Conflicts in High-Technology Industries (Institute for
International Economics, 1992) and numerous other works on economic
competitiveness. Tyson recently was named one of four White House
appointees to the National Bipartisan Commission on the Future of
Medicare. She is a principal of the Law & Economics Consulting Group
and a member of the boards of directors of Ameritech Corporation, the
Council on Foreign Relations, Eastman Kodak Company, the Institute for
International Economics, the John D. and Catherine T. MacArthur
Foundation, and Morgan Stanley, Dean Witter, Discover & Co. Before her
appointments in Washington DC, Tyson served at UC Berkeley as
Research Director of the Berkeley Roundtable on the International
Economy (BRIE) and as Director of the Institute of International Studies.
Tyson received her B.A. in Economics, summa cum laude, in 1969 from
Smith College in Massachusetts and her Ph.D. in Economics in 1974 from
the Massachusetts Institute of Technology.
Harold Varmus
Harold Varmus has served as the President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center in New York City since January
2000. A former Director of the National Institutes of Health (NIH), in
1989 Dr. Varmus received the Nobel Prize for Physiology or Medicine,
sharing the award with co-recipient Dr. J. Michael Bishop for their work
on the genetic basis of cancer. In 1993, Varmus was named by President
Clinton to serve as the Director of the National Institutes of Health, a
position he held until the end of 1999. In addition to writing over 300 sci-
150
entific papers and four books, including an introduction to the genetic

basis of cancer for a general audience, Varmus has been an advisor to the
Federal government, pharmaceutical and biotechnology firms, and many
academic institutions. He has been a member of the US National Academy
of Sciences since 1984 and of the Institute of Medicine since 1991. Dr.
Varmus earned a B.A. in English from Amherst College and an M.A. in
English from Harvard University. He is a graduate of Columbia
Universitys College of Physicians and Surgeons and served on the medical
house staff at Columbia-Presbyterian Hospital. His scientific training
occurred first as a Public Health Service Officer at the NIH, where he
studied bacterial gene expression with Dr. Ira Pastan, and then as a postdoctoral fellow with Dr. Bishop at the University of California, San
Francisco.
Reports and Working Papers
Titles of Reports of CMH Working Groups

Health, Economic Growth, and Poverty Reduction: Report of Working
Group 1 of the Commission on Macroeconomics and Health
Global Public Goods For Health: New Strategies for the 21st Century:
Report of Working Group 2 of the Commission on Macroeconomics
and Health
Mobilization of Domestic Resources for Health: Report of Working
Health and the International Economy: Report of Working Group 4 of
the Commission on Macroeconomics and Health
Improving Health Outcomes of the Poor: Report of Working Group 5 of
the Commission on Macroeconomics and Health
International Development Assistance and Health: Report of Working
Working Paper Series
Papers submitted and available at www.cid.harvard.edu
Working Group 1
Paper 1: HIV/AIDS in the Caribbean: Economic Issues-Impact and
Investment Response (Theodore K)
Paper 2: Modeling the Effects of Health Status and the Educational
Infrastructure on the Cognitive Development of Tanzanian School
Children (Bhargava A)
Paper 3: Health, Inequality, and Economic Development (Deaton A)
Paper 4: Cross-Country Variation in Mortality Decline, 1962-87: The
Role of Country-Specific Technical Progress (Jamison DT, Sandbu M)
Paper 5: Poverty and Health (Wagstaff A)
Paper 6: Mental Illness and the Labour Market in Developing Nations
(Frank RG)
Paper 7: Health, Nutrition and Economic Prosperity: A Microeconomic
Perspective (Thomas D)
152
Paper 8: Health, Human Capital, and Economic Growth (Bloom DE,

Canning D)
Paper 9: Health, Longevity and Life-Cycle Savings (Bloom DE,
Canning D)
Paper 10: Impact of Malaria on Economic Growth (Gallup, JL,
Sachs, JD)
Paper 11: Health as Human Capital and Productivity (INCAP)
Paper 12: Responding to the Burden of Mental Illness (Whiteford H,
Teeson M, Scheurer R, Jamison D)
Paper 13: Health Changes and a Compound of National Income: The
Impact of AIDS in Five Countries of eastern Africa (Wang)
Working Group 2
Paper 1: A Conceptual Framework for Understanding Global and
Transnational Goods for Health (Sandler T, Arce D)
Paper 2: Cancelled
Paper 3: International Collaboration in Health Research (Lucas AO)
Paper 4: Scientific Capacity Building to Improve Population Health:
Knowledge as a Global Public Good (Freeman P, Miller M)
Paper 5: Ethics in International Health Research: A Perspective from the
Developing World (Bhutta ZA)
Paper 6: A Culture of Ethical Conduct in Research: The Proper Goal of
Capacity Building in International Research Ethics (Lavery JV)
Paper 7: The Role of Intellectual Property and Licensing in Promoting
Research in International Health: Perspectives from a Public Sector
Biomedical Research Agency (Keusch GT, Nugent RA)
Paper 8: Public Policies to Stimulate the Development of Vaccines and
Drugs for the Neglected Diseases (Kremer M)
Paper 9: Orphan Drug Laws in Europe and the US: Incentives for the
Research and Development of Medicines for the Diseases of Poverty
(Milne C, Ronchi E)
Paper 10: Differential Pricing for Pharmaceuticals: Reconciling Access,
R&D, and Intellectual Property (Danzon P)
Paper 11: A Proposal to Use Patent Law to Lower Drug Prices in
Developing Countries (Lanjouw J)
Paper 12: Patent Law, TRIPS, and R&D Incentives: A Southern
Perspective (Correa C)
Paper 13: Patents in Genomics and Basic Research: Issues for Global
Health (Barton J)

153
Paper 14: International Scientific Cooperation: Considerations from

Previous Efforts (Barton J, Heumueller D)
Paper 15: The Biological and Epidemiological Basis of Global Public
Goods for Health (Bradley D)
Paper 16: Preventing the Cross-Border Spread of Communicable Disease
(St. John R, Plant A)
Paper 17: Global Responses to the Growing Threat of Antimicrobial
Resistance (Smith RD, Coast J)
Paper 18: International Law and Global Infectious Disease Control
(Fidler D)
Paper 19: Global Information Needs for Health (Musgrove P)
Paper 20: The Evolving Role of the International Agencies in Supplying
and Financing Global Public Goods for Health (Bumgarner R)
Paper 21: Public-Private Partnerships to Promote R&D Activity
(Kettler H, Towse A)
Paper 22: Innovative Financing of Global Public Goods for Health
(Stansfield S, Harper M, Lamb G, Lob-Levyt J)
Working Group 3
Paper 1: Health Insurance for the Informal Sector in Africa: Design
Features, Risk Protection, and Resource Mobilization (ArhinTenkorang D)
Paper 2: Financing Health Systems through Efficiency Gains
(Hensher M)
Paper 3: A Summary Description of Health Financing in WHO Member
States (Musgrove P and Zeramdini R)
Paper 4: A Synthesis Report on the Role of Community in Resource
Mobilization and Risk Sharing (Preker G, Carrin G, Dror D,
Jakab M, Hsiao W, Arhin- Tenkorang D)
Paper 5: Debt Relief Initiative and Public Health Spending in Heavily
Indebted Countries (HIPCS) (Gupta S, Clements B, Guin-Siu MT,
Leruth L)
Paper 6: Mobilizing Resources for Health: the Case for User Fees
Revisited (Arhin-Tenkorang D)
Working Group 4
Paper 1: Post-Trips Options for Access to Patented Medicines in
Developing Countries (Scherer FM, Watal J)
154
Paper 2: Differentiated Pricing of Patented Products (Barton JH)

Paper 3: Consumption and Trade in Off-Patented Medicines (Bale H)
Paper 4: Protection of Traditional Medicine (Wilder R)
Paper 5: Trade in Health Services (Chanda R)
Paper 6: Trade Liberalization in Health Insurance: Opportunities and
Challenges: The Potential Impact of Introducing or Expanding the
Availability of Private Health Insurance within Middle and Low
Income Countries (Sbarbaro J)
Paper 7: GATS and Trade in Health Insurance Services: Background
Note (Lipson D)
Paper 8: Confronting the Tobacco Epidemic in an Era of Trade
Liberalization (Bettcher D, Chitra Subramanian E, Guidon E,
Perucic AM, Soll L, Grabman G, Joossens L, Taylor A)
Paper 9: Trade Barriers and Prices of Essential Health Sector Inputs
(Woodward D)
Paper 10: Globalisation and Health: A Framework for Analysis and
Action (Woodward D, Drager N, Beaglehole R, Lipson DJ)
Working Group 5
Paper 1: Avoidable Mortality in India (Jha P)
Paper 2: The Evidence Base for Interventions to Prevent HIV Infection in
Low and Middle Income Countries (Jha P, Plummer FA)
Paper 3: The Evidence Base of Interventions for Care and Management
of AIDS in Low and Middle Income Countries (Willbond B,
Plummer FA)
Paper 4: Modelling the HIV/AIDS Epidemics in India and Botswana:
The Effect of Intervention (Nafelkerke NJD)
Paper 5: Maternal and Neonatal Mortality in Low and Middle Income
Countries (Gelband H)
Paper 6: The Evidence Base for Interventions to Reduce Malaria
Mortality in Low and Middle Income Countries (Meek S)
Paper 7: The Evidence Base for Interventions to Reduce SmokingRelated Mortality in Low and Middle Income Countries
(Chaloupka FJ, Jha P, Corrao M)

155
Paper 8: The Evidence Base for Interventions to Reduce TB Mortality in

Low and Middle Income Countries (Borgdorff M)
Paper 9: The Evidence Base for Interventions to Reduce TB Mortality in
Low and Middle Income Countries (Gelband H, Stansfield S)
Paper 10: The Evidence Base for Interventions to Reduce Under-Five
Mortality from Vaccine-Preventable Diseases in Low and Middle
Income Countries (England S, Melgaard B)
Paper 11: The Evidence Base for Interventions to Reduce Malnutrition
Among Children in Low and Middle Income Countries (Nemer LE)
Paper 12: The Health Impact of Indoor Air Pollution (Vonschirnding Y)
Paper 13: Cancelled
Paper 14: Constraints to Improving Health Outcomes of the Poor:
Conceptual Framework and Country Typology (Hanson K,
Ranson MK)
Paper 15: Approaches to Improving the Performance of the Peripheral
Health System: A Review of the Evidence (Olivera-Cruz V)
Paper 16: Constraints to Scaling Up Health Interventions: Country Case
Study: India (Rao Seshadri S)
Study: Tanzania (Munishi G)
Study: Chad (Wyss K)
Paper 19: The Costs of Scaling Up Interventions: Methods and Estimates
(Kumaranayake L)
Paper 20: The Costs of Scaling Up Interventions: Estimates for the Poor
in Middle Income Countries (Bertozzi S)
Paper 21: Cancelled
Paper 22: Cancelled
Paper 23: Note on the Health Impact of Water and Sanitation Services
(Vaz LME)
Paper 24: Constraints to the Scale-Up of Priority Interventions Factoring
in Quality of Governance and Policy Framework (Vergin H)
Paper 25: HIV/AIDS Control in IndiaLessons from Tamil Nadu
(Ramasundaram S)
Paper 26: Preliminary Estimates of the Cost of Expanding TB, Malaria
and HIV/AIDS Activities for sub-Saharan Africa (Kumaranayake L)
156
Working Group 6
Paper 1: Monitoring Financial Flows for Health Research (Michaud C)
Paper 2: Perspectives on Improving Health in Poor Countries:
Qualitative Assessment of Multilateral Agency Views and Behaviour
(Nelson J)
Paper 3: Ideas Work Better than Money in Generating Reform But
How? Assessing Efficiency of Swedish Development Assistance in
Health to Viet Nam (Jerve AM)
Paper 4: Qualitative Assessment of Bilateral Agency Views and
Behaviour: Interviews With Non-Health Specialists (Ojermark M)
Paper 5: Global Health Initiatives and National Level Health Programs:
Assuring Compatibility and Mutual Re-Enforcement (Forsberg BC)
Paper 6: Structural Adjustment and Health: A literature review of the
debate, its role-players and presented empirical evidence (Breman A,
Shelton C)
Paper 7: A Case Study on the European Commissions Contribution to
Development Assistance and Health (DAH) (Daniels D)
Paper 8: Review of Externally Aided Projects in the Context of their
Integration into the Health Service Delivery in Karnataka
(Narayan R)
Paper 9: Notes on DAH and Its Effectiveness: The Interests of Recipient
Countries (Issaka-Tinorgah A)
Paper 10: Recent Trends in Development Assistance in Health (OECD)
Appendix 2:
Analysis of the Costs of Scaling
Up Priority Health Interventions in Lowand Selected Middle-Income Countries1
Purpose
The purpose of this appendix is to present a brief description of the
methodology and an analysis of the estimated costs of scaling up priority
interventions. This analysis builds on the cost analysis undertaken for
Working Group 5; a more detailed discussion of methodology for the
close-to-client (CTC) level costs of the priority set of interventions is presented in the costing background paper.2 There are two sections to this
appendix. In the first section, an analysis of the cost results is undertaken
by country income classification. This analysis estimates the total health
expenditures required for reaching target levels of coverage, the amount of
domestic resources for health that may be mobilized, and the net financing gap. In the second section, analyses are undertaken on a regional level.
Analysis by Development Assistance CommitteeBased Income
Classification and Disease Classification
Incremental Cost Analysis (Main Analysis for WG5 Report):
CTC-level costs of selected set of priority interventions
The cost analysis estimates the cost of scaling up the coverage of 49 priority health interventions (and 65 treatment lines) at the CTC level in 83
poor countries. These interventions have been identified as key in addressing the major health conditions among the poor (and are described in
Table A2.A). The expansion of these activities is based on reaching target
levels of coverage for 2007 and 2015, relative to estimates of coverage levels in the year 2002. The incremental cost analysis focuses on selected
interventions at a CTC level, and so does not include all the services needed for the expansion of the entire local health system. The analysis assesses the full economic price of providing services. Costs include capital components and related requirements for complementary management and
158
institutional support, as well as the investments in training new personnel

and expanding facilities in order to deliver services at these higher levels
of coverage.
The cost analysis was designed to estimate the volume of additional
or incremental resources that would be required for a large-scale expansion of activities from existing levels of services. The costs of expanding
activities are presented as the cost additional to current levels of health
expenditure. Thus these costs estimates reflect the additional expenditure,
which is required over and above current patterns of expenditure.
The costs of expanding services will vary by country according to the
extent and type of illness, and also by demographic and socioeconomic
factors. Hence the costs of scaling up have been modeled on a countryspecific basis for each intervention, taking into account complementarities
between interventions. Poor countries have been defined as those having
a GNP per capita of less than US $1,200 (year 1999 US$). Given the substantial disease burden in sub-Saharan Africa, all countries of this region
have been included in the analysis, independent of their economic performance.3
The costs of expanding services were prepared for two scenarios (see
Working Group 5 Synthesis Paper), based on the level of investment and
ability to expand services, reflecting different assumptions about the timeframe, investments in capacity and infrastructure, and feasible levels of
target coverage required to achieve health benefits. The scenario presented here for 2007 assumes scaling up in the context of large-scale investments at both the peripheral and local-hospital levels, but is restricted by
the extent to which these investments can take place within 5 years. The
Commission endorses this scenario as the basis of its recommendations.
Scenario 2015 assumes scaling up given large-scale investments over a
period of 13 years to high levels of coverage for all interventions.
A model was used to estimate the cost of implementing the interventions, the required new investments in training staff and facilities, and the
required management and institutional support. In order to obtain estimates of the costs of scaling up, first available demographic, behavioral,
and epidemiological data are used to determine the size of the relevant target groups that the prevention and care interventions are designed to
reach, in other words, the population in need (PIN). Second, estimates
were made of the current level of coverage for these interventions. Target
coverage levels for the interventions were also established (see Table 7 in
text). Third, cost data drawn from a range of interventions were related
Appendix 2: Analysis of the Costs of Scaling Up Priority Health

Interventions in Low- and Selected Middle-Income Countries
159
to the size of the PIN in order to provide national estimates for each country. As we were doing a country-specific approach to estimating costs, in
order to make the costs comparable, nontraded components of costs were
adjusted for purchasing-power parity. Given the uncertainty regarding the
need of services and the costs of different interventions, a likely lowhigh
range of costs was estimated. Costs for required investments in training
and facilities were calculated on the size of the PIN for each scenario based
on contact time with health service staff and use of inpatient or ambulatory facilities. The management and institutional support component of
the costs included administrative and support functions, monitoring,
supervision, and institutional strengthening within the CTC level. These
costs were also based on the size of the PIN.
The incremental costs estimates provide an annual average cost of
implementing these activities in year 2002 constant US dollars.4 These estimates have also been translated into projected budget flows on annual
basis.
Estimation of the country-specific population in need for a particular
service rests principally on two parameters: the population size and the
incidence or prevalence of a condition or risk. Current estimates and
future prospects of the population size are available. However, countryspecific information on current morbidity or risks is limited. Due to this
substantial lack of data, the incidence and prevalence of disease or risk
have been assumed to be constant over time. Consequently, this approach
ignores any potential changes in disease prevalence or incidence and any
effect of the increased service coverage on patterns of disease. Whereas
this is of little or no relevance for conditions such as obstructed labor, it is
a more severe limitation for transmittable diseases, in particular
HIV/AIDS and tuberculosis where an impact would be expected. There
may also be increases in the incidence or prevalence of these diseases over
time, however, and so the direction of the bias attributable to the assumption of constant incidence or prevalence is not clear.
Table A2.1 presents the estimates of the incremental cost package for
all disease and condition groups, in terms of total dollars, per capita figures, and percent of GNP. Per capita figures were calculated on the basis
of projected population estimates for the years 2007 and 2015.5 GNP figures were estimated by assuming between 1 percent and 5 percent annual
growth for per capita GNP.6 The average cost estimate of the lowhigh
range is presented.
160
Table A2.1.
Annual Incremental Costs (US$ 2002) by Development Assistance

Committee-Based Income Classification
2007
Average
Estimate
2015
Average
Estimate
TOTAL DOLLARS (000 000 000, BILLIONS OF DOLLARS)

All countries
All Low-Income Countries
(Least-Developed Countries +
Other Low-Income Countries)
Low-Middle-Income Countries
Upper-Middle-Income Countries
26
19
46
33
8
11
5
1
15
18
11
2
6
7
10
10
11
5
4
26
16
8
7
44
PER CAPITA ($)

All countries
Percent of GNP
All countries
0.7
1.3
0.9
1.6
3.4
0.9
0.3
0.6
4.5
1.1
0.4
0.9
Analysis by Health Condition

The set of interventions chosen have been broadly characterized by disease
or condition type (see Table A2.A), but in reality, the nature of health service delivery means that there are overlaps between them. For example,
malaria prophylaxis for pregnant women could be included under either
malaria prevention or maternity-related interventions. The latter was chosen, as this was the nature of the delivery mechanism. The analysis in
Table A2.2 shows the breakdown of incremental costs by health condition.

161
Whereas methods exist to attribute the burden of disease to specific

illnesses or health problems, the practical implementation of most programs for these conditions cannot be considered separately within a health
system. Achieving widespread coverage for these key programs will
require substantial strengthening and upgrading throughout the existing
health system, providing externality benefits for nonpriority health conditions. Although theoretically it is possible to cost each key intervention
Table A2.2.
Annual Incremental Costs ($US 2002) by Health Condition

2007 Average Estimate
TOTAL DOLLARS (000 0000, BILLIONS OF DOLLARS)

All interventions
TB Treatment
Malaria Prevention
Malaria Treatment
HIV Prevention
HIV Care
HIV Treatment (HAART)
Childhood-related illness Treatment
Childhood-related illnesses Immunization
Maternity-related illnesses
26
0.5
2
0.5
6
3
5
4
1
4
46
1
3
1
8
6
8
11
1
5
PER CAPITA ($)

All interventions
TB Treatment
Malaria Prevention
Malaria Treatment
HIV Prevention
HIV Care
5.9
0.1
0.5
0.1
1.5
0.6
1.2
0.9
0.2
0.8
9.5
0.2
0.7
0.2
1.7
1.3
1.7
2.2
0.3
1.1
0.71
0.02
0.06
0.01
0.18
0.08
0.14
0.10
0.03
0.10
0.88
0.02
0.07
0.02
0.16
0.12
0.15
0.21
0.02
0.11
Percent of GNP
All interventions
TB Treatment
Malaria Prevention
Malaria Treatment
HIV Prevention
HIV Care
Note: Smoking-control policies are included, but are assumed to be self-financing.
162
separately, in reality, the implementation of most programs must be considered and costed within the context of a health system.
Further adjustments were made to the incremental costs in order to
reflect the costs of the process of scaling up (Table A2.3). These additional costs were done on a country-specific health system basis, so it would
be misleading to attempt to undertake the same adjustment by health condition. Hence subsequent tables present totals for all interventions.
Adjustments to Reflect Requirements for the Process of Scaling Up

In addition to the costs of scaling-up interventions at the CTC level, the
process of scaling up itself will require a range of other forms of support
to ensure effective implementation. Four adjustments were undertaken to
reflect additional expenditures beyond the incremental scaling up of this
selected set of interventions.
First, a management cost above the CTC level was estimated based
on total incremental costs, to reflect the necessary input from institutions
above the CTC level (e.g., Ministry of Health) in the implementation of
the scaled-up interventions. It was estimated that above-CTC management costs would be approximately 15 percent of the total incremental
cost.
Second, it was assumed that an additional 15 percent would be
required to improve absorptive capacity given the magnitude of resources
required to scale up. This would include ensuring adequate financial and
monitoring systems at both the district and above-district levels.
Third, the costs in Table A2.1 assume that existing levels of coverage
are constant and adequate. In reality, the quality of existing coverage is
highly variable. We thus made an adjustment in the costs to reflect the fact
that it would be necessary to undertake expenditures to improve quality
(e.g., ensuring adequate supply of drugs) for current levels of coverage.
Thus the estimated expenditures for 2002 for the selected set of interventions were multiplied by a quality adjustment factor. This adjustment
ranged from 10 percent to 25 percent of estimated 2002 expenditures,
depending on the income level of the country. Fourth, public-sector wages
are generally too low to attract staff and ensure good performance, as
reflected in high attrition rates (for example to the private sector) and
poor motivation. Moreover, scaling up will require recruitment of additional health-sector personnel. In order to adjust salaries to the level that
might be needed to attract and retain staff, a 100 percent increase in
salaries for all staff was factored in. This salary adjustment was made for

163
all health-sector personnel, not just those who are additionally required
for scaling up the interventions in the incremental package. Table A2.3
provides the estimates for the adjusted package by total dollars, per capita and percent of GNP.
Total Health Expenditure Required

In order to estimate total health expenditure required, a distinction was
made between domestic health expenditure and donor expenditure in the
form of ODA. Data were available on the extent of ODA spent in health
for the 1997 to 1999 period, and it was assumed that this reflected the
average in 1998.7 It was also assumed that between 1998 and 2002, ODA
Table A2.3.
Incremental Annual Costs Adjusted For Scaling-Up Process

($US 2002) by Development Assistance CommitteeBased
Classification

All countries
57
40
94
66
17
23
14
3
29
37
24
4
13
14
20
21
22
12
9
57
32
17
15
91
PER CAPITA ($)

All countries
All low-income countries
Percent of GNP
All countries
1.6
2.7
1.8
3.3
6.9
1.9
0.7
1.3
8.8
2.2
0.8
1.8
164
in the health sector grew at an annual rate of 5 percent. Total health

expenditure in 1999 was calculated based on the 1999 total health expenditure as a percentage of GNP.8 By subtracting the ODA component from
1999 total health expenditure, total domestic resources spent on health in
1999 were estimated. Total health expenditure in 2002 was then estimated as the sum of estimated ODA flows in 2002 and domestic resources in
2002. The latter was derived by using the 1999 share of domestic
resources relative to 1999 GNP and multiplying by 2002 GNP.
Total health expenditure required in 2007 and 2015 was then estimated as addition of the total health expenditure in 2002 and the scaleadjusted costs from Table A2.3. Table A2.4 presents the estimates for total
Table A2.4.
Required Annual Total Health Expenditure by Development

Assistance CommitteeBased Classification ($US 2002)
2002 Baseline
2007
Average Estimate
2015
Average Estimate

All countries
106.1
53.3
162.8
93.5
200.3
119.3
8.5
44.8
41.1
11.7
25.3
68.2
55.0
14.3
37.2
82.1
65.1
16.0
26
21
38
34
42
38
13
24
28
266
34
34
36
315
41
37
40
339
PER CAPITA ($)

All countries
Percent of GNP
All countries
3.7
4.4
4.5
6.3
3.9
5.9
4.3
4.4
2.8
6.8
10.4
5.5
2.9
7.3
11.4
4.9
2.2
6.8

Table A2.5.
165
Potential Domestic Resource Mobilization ($US 2002) by

Development Assistance CommitteeBased Classification
2002 Baseline
2007
Average Estimate
2015
Average Estimate

All countries
102.8
50.5
163.6
76.5
283.5
124.0
7.1
43.4
40.6
11.7
11.1
65.5
71.9
15.2
18.2
105.8
138.7
20.7
25
20
38
28
59
40
11
23
28
265
15
32
47
335
20
47
86
441
PER CAPITA ($)

All countries
Percent of GNP
All countries
(Least-Developed Countries+
3.6
4.1
4.6
5.1
5.5
6.1
3.5
4.3
2.8
6.8
4.6
5.3
3.8
7.8
5.6
6.3
4.7
8.8
Note: Assumes 1 percent of GNP increase in domestic resources for health in 2007 and 2 percent increase of GNP in 2015, compared with 2002 baseline. If this increment is greater
than the amount needed for scaling up, then the country is assumed to mobilize the actual amount needed.
health expenditure required annually, in order to achieve the 2007 and

2015 target coverage levels.
Analysis of Net Financing Gap for Increased Domestic Resource

Mobilization
The net financing gap is calculated for the cost of scaling up these priority health interventions. In this analysis, it is assumed that there will be a
1 percent increase in the percentage of health expenditure relative to GNP
166
due to increased domestic resource mobilization in 2007. It is assumed

that, by 2015, the percentage of health expenditure relative to GNP has
increased by 2 percent. The estimated level of domestic resource mobilization is provided in Table A2.5 for the years 2002, 2007, and 2015. The
net financing gap estimates are presented in Table A2.6. This analysis is
undertaken for each country, and then the results are aggregated for each
income category. If the countrys own domestic resources are greater than
total health expenditures, we assume that the financing gap is exactly 0. If
Table A2.6.
Annual Net Financing Gap ($US 2002; Development Assistance

CommitteeBased Classification)

All countries
(Least-Developed Countries+
22.1
20.5
30.7
28.4
14.3
6.2
1.5
0.04
20.8
7.5
2.3
0
PER CAPITA ($)

All countries
5
7
6
4
19
3
1
1
23
3
1
0
Percent of GNP
All countries
0.6
1.4
0.6
1.4
5.9
0.5
0.1
0.02
6.4
0.4
0.1
0
Note: This analysis has been done on a country-specific basis and then summarized by the
DAC grouping of countries. Thus, countries whose domestic resources are greater than
their required health expenditures were treated as having a net financing gap of 0. If the
required health expenditure is greater than domestic resources, their difference was
included as a net financing gap for the country. Thus entries in Table A2.6 are not equal
to the entries in Table A2.4 minus the entries in Table A2.5, as not every country had a
in the DAC category has a positive net financing gap.

Table A2.7.
167
Incremental Annual Costs ($US 2002) by Region


All countries
Sub-Saharan Africa -low
Sub-Saharan Africa -mid
South Asia
Latin and Central America
26
10
2
6
7
0.4
0.4
46
18
3
11
11
0.8
0.8
6
14
26
3
5
4
9
10
21
46
5
7
7
16
PER CAPITA ($)

All countries
South Asia
Percent of GNP
All countries
South Asia
0.7
4.0
0.8
0.3
0.8
0.4
0.9
0.9
5.5
1.2
0.3
0.9
0.7
1.3
the countrys own domestic resources are less than total health expenditures, the financing gap is the difference between the two. After calculating the financing gap on a country-by-country basis, these gaps are then
aggregated across DAC categories in Table A2.6. Because of this method
of calculation, the entries in Table A2.6 are not equal to the entries in
Table A2.4 minus the entries in Table A2.5. This would be the case only
if every country in the DAC category had a positive net financing gap.
Analysis of Cost Estimates by Region

This section presents data by regional classification. Table A2.C in the
Appendix shows the grouping of countries by region. Tables A2.7 and
A2.8 show the incremental and scale-adjusted costs by region. Table A2.8
presents an analysis of domestic resource mobilization, similar to the scenarios in Table A2.4. Tables A2.9 and A2.10 show the total health expenditures by region, and the net financing gap by region.
168
Table A2.8.
Incremental Annual Costs Adjusted for Scaling-Up Process

($US 2002) by Region

All countries
South Asia
57
20
4
15
15
1
1
94
35
7
25
24
2
2
13
28
56
8
10
9
21
20
41
91
13
14
14
33
PER CAPITA ($)

All countries
South Asia
Percent of GNP
All countries
South Asia
1.6
8.1
1.7
0.7
1.7
1.0
2.0
1.8
10.7
2.5
0.8
1.9
1.4
2.8

Table A2.9.
169
Required Annual Total Health Expenditure ($US 2002) by

Region
2002 Baseline
2007
Average Estimate
2015
Average Estimate

All countries
South Asia
106.1
8.3
12.6
42.3
36.0
4.5
2.5
162.8
28.6
16.4
57.4
51.4
5.5
3.4
200.3
43.7
19.5
67.1
59.8
6.2
4.1
26
13
192
24
25
39
60
38
40
237
31
34
47
76
42
50
259
34
35
50
82
PER CAPITA ($)

All countries
South Asia
Percent of GNP
All countries
South Asia
3.7
3.9
6.4
2.7
4.9
5.0
6.3
4.5
11.4
7.3
2.8
5.7
5.5
7.4
3.9
13.2
7.0
2.1
4.8
5.0
6.9
170
Table A2.10. Annual Domestic Resource Mobilization ($US 2002) by Region

2002 Baseline
2007
Average Estimate
2015
Average Estimate

All countries
South Asia
102.8
7.0
12.5
41.8
34.9
4.4
2.2
163.6
10.8
16.5
75.0
52.3
5.9
3.0
283.5
17.5
22.9
145.3
84.8
8.4
4.5
25
11
191
24
25
38
53
38
15
238
40
34
51
68
59
20
305
74
50
69
89
PER CAPITA ($)

All countries
South Asia
Percent of GNP
All countries
South Asia
3.6
3.3
6.3
2.6
4.8
4.9
5.6
4.6
4.3
7.3
3.6
5.8
5.9
6.6
5.5
5.3
8.2
4.6
6.8
6.9
7.6

171
Table A2.11. Annual Net Financing Gap ($US 2002) by Region


All countries
South Asia
22.1
17.8
0.9
1.0
1.7
0.2
0.5
30.7
26.2
1.3
1.3
1.4
0.2
0.2
5
25
12
1
1
2
12
6
30
17
1
1
2
5
PER CAPITA ($)

All countries
South Asia
Percent of GNP
All countries
South Asia
0.6
7.1
0.4
0.05
0.2
0.2
1.1
0.6
7.9
0.5
0.04
0.1
0.2
0.4
Note: This analysis has been done on a country-specific basis and then summarized by region.
Thus, countries whose domestic resources are greater than their required health expenditures were treated as having a net financing gap of 0. If the required health expenditure is
greater than domestic resources, their difference was included as a net financing gap for
the country. Thus entries in Table A2.11 are not equal to the entries in Table A2.9
minus the entries in Table A2.10, as not every country in the region has a positive net
financing gap.
172
Table A2.A.
Selected Set of Interventions
Tuberculosis Treatment
Directly observed short-course treatment for

smear-positive patients
Directly observed short-course treatment for
smear-negative patients
Malaria Prevention
Insecticide-treated nets
Residual indoor spraying
Malaria Treatment
Treatment for clinical episodes of malaria
HIV/AIDS Prevention
Youth focused interventions

Interventions working with sex workers and clients
Condom social marketing and distribution
Workplace interventions
Strengthening of blood transfusion systems
Voluntary counseling and testing
Prevention of mother-to-child transmission
Mass media campaigns
Treatment for sexually transmitted diseases
HIV/AIDS Care
Palliative care
Clinical management of opportunistic illnesses
Prevention of opportunistic illnesses
Home-based care
HIV/AIDS HAART
Provision of HAART
Childhood Disease
Related Interventions
(Treatment)
Treatment of various conditions (acute respiratory

infections, diarrhea, causes of fever, malnutrition, anemia)
Childhood Disease
Related Interventions
(Immunization)
Vaccinations (BCG, OPV, DPT, Measles, Hepatitis B, HiB)
Maternity-Related
Interventions
Antenatal care
Treatment of complications during pregnancy
Skilled birth attendance
Emergency obstetric care
Postpartum care (including family planning)
Note: Not all interventions have been scaled up in each country. Instead, the costs of scaling up
include the interventions for each country that are epidemiologically appropriate. For
example, malaria control measures are not included in countries where malaria does not
significantly contribute to the burden of disease. Source: Kumaranayake L, Kurowski C,
Conteh L. (2001). Costs of Scaling-up Priority Health Interventions in Low and Selected
Middle Income Countries. Background Paper for Working Group 5 Improving the
Health Outcomes of the Poor, Commission on Macroeconomics and Health.

Table A2.B. Classification of Countries by Development Assistance
CommitteeBased Categories1
Country
Afghanistan
Angola
Bangladesh
Benin
Bhutan
Burkina Faso
Burundi
Cambodia
Central African Republic
Chad
Comoros
Dem. Republic of the Congo
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Haiti
Lao Peoples Dem. Republic
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Sierra Leone
Somalia
Sudan
Togo
Uganda
United Rep. of Tanzania
Yemen
Zambia
Armenia
Azerbaijan
Cameroon
Congo
Country
Cte dIvoire
Georgia
Ghana
India
Indonesia
Kenya
Kyrgyzstan
Mongolia
Nicaragua
Nigeria
Pakistan
Republic of Moldova
Senegal
Tajikistan
Turkmenistan
Ukraine
Uzbekistan
Viet Nam
Zimbabwe
Lower-Middle-Income Countries
Albania
Bolivia
Cape Verde
China
(excluding Hong Kong SAR
Cuba
Djibouti
Equatorial Guinea
Guyana
Honduras
Maldives
Namibia
Papua New Guinea
Philippines
Samoa
Solomon Islands
Sri Lanka
Swaziland
Syrian Arab Republic
Vanuatu
Botswana
Gabon
South Africa
1. Countries not included in this table were not costed.
173
174
Table A2.C.
Regional Classification of Countries
Sub-Saharan Africa* Low Income (SSA Low):

Angola, Benin, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad,
Comoros, Congo, Cte dIvoire, Democratic Republic of the Congo, Eritrea, Ethiopia,
Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar,
Malawi, Mali, Mauritania, Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra
Leone, Somalia, Sudan, Togo, Uganda, United Republic of Tanzania, Yemen, Zambia,
Zimbabwe
Sub-Saharan Africa* Middle Income (SSA Mid):
Botswana, Cape Verde, Djibouti, Equatorial Guinea, Gabon, Namibia, South Africa,
Swaziland, Syrian Arab Republic
East Asia and Pacific (EAP):
Cambodia, China (excluding Hong Kong SAR and Macao SAR), Democratic Peoples
Republic of Korea, Indonesia, Lao Peoples Democratic Republic, Mongolia,
Myanmar, Papua New Guinea, Philippines, Samoa, Solomon Islands, Vanuatu,
Viet Nam
South Asia (SA):
Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
Eastern Europe and Central Asia (EEC):
Albania, Armenia, Azerbaijan, Georgia, Kyrgyzstan, Republic of Moldova, Tajikistan,
Turkmenistan, Ukraine, Uzbekistan
Latin and Central America (LAC):
Bolivia, Cuba, Guyana, Haiti, Honduras, Nicaragua
*We have grouped two middle-eastern countries, Syrian Arab Republic and Yemen, within the
sub-Saharan African group.

175
Notes
1.
Prepared by Lilani Kumaranayake, Christoph Kurowski, and Lesong Conteh,

London School of Hygiene and Tropical Medicine.
2.
Kumaranayake, L., C. Kurowski, and L. Conteh (2001). Costs of Scaling-up

Priority Health Interventions in Low and Selected Middle Income Countries.
Background Paper for Working Group 5 Improving the Health Outcomes of the
Poor, Commission on Macroeconomics and Health.
3.
These cost figures reflect the estimated costs of improving the coverage of program activities on a national scale, aggregated on the basis of the 1997 OECD
DAC criteria for classifying countries: Least-developed countries (LDC), other
low-income countries (OLIC), lower-middle-income countries (LMIC), and
upper-middle-income-countries (UMIC). The criteria are found in the OECD,
Development Cooperation Report (The DAC Journal) 2000. When the classification into which countries fall is compared with the most recent World
Development Report (WDR) by the World Bank, there are a number of differences, as the WDR presents a low/middle-income country classification based on
1999 GNP figures. We have thus revised the 1997 DAC classification to reflect
these changes, and the list of countries is provided in the Table A2.B.
4.
An average annual inflation rate of 3.2 percent was used to derive constant US
dollars in terms of 2002 prices.
5.
Population projections were taken from The World Population Prospects, 1998
Revision, published by the UN Department of Social and Economic Affairs,
Population Division.
6.
The GNP data are taken from the World Development Report 2000/2001 published by the World Bank. Note that the GNP figures for the Democratic Peoples
Republic of Korea were not available. A 5 percent annual per capita GNP growth
rates was assumed for China. A 3 percent annual per capita GNP growth rate was
assumed for Bangladesh, Bhutan, India, Indonesia, Lao Peoples Democratic
Republic, Sri Lanka, and Viet Nam. A 2 percent annual per capita GNP growth
rate was assumed for Albania, Armenia, Azerbaijan, Bolivia, Botswana,
Cambodia, Cameroon, Cape Verde, Congo, Cte dIvoire, Cuba, Gabon,
Georgia, Ghana, Guyana, Honduras, Kyrgyzstan, Maldives, Mongolia, Nepal,
Nicaragua, Pakistan, Papua New Guinea, Philippines, Republic of Moldova,
Samoa, Solomon Islands, South Africa, Syrian Arab Republic, Tajikistan,
Turkmenistan, Ukraine, Uzbekistan, and Vanuatu. A 1 percent annual per capita
GNP growth rate was assumed for the remaining countries.
7.
DAC Report 2000 published by the OECD.
8.
Data taken from The World Health Report 2000 published by WHO.
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Glossary
ADB: Asian Development Bank: multilateral development finance institution, owned by 59 member states, dedicated to reducing poverty in
Asia and the Pacific. See http://www.adb.org
AfDB: African Development Bank: Regional multilateral development
bank, owned by 77 nations, engaged in promoting the economic
development and social progress of its regional member countries
through making loans and equity investments, providing technical
assistance for the preparation and execution of development projects
and programs, promoting investment of public and private capital for
development purposes, and responding to requests for assistance in
coordinating development policies and plans of its member countries.
The bank is also required to give special attention to national and
multinational projects and programs that promote regional integration. See http://www.afdb.org
African Sleeping Sickness: see trypanosomiasis.
ANC: Antenatel care: Health care in the period between conception and
birth. Same as prenatal care.
ARI: Acute Respiratory Tract Infection.
ART: Anti-Retroviral Therapy is treatment with antiretroviral drugs.
Antiretroviral drugs are medicines that prevent the reproduction of a
type of virus called a retrovirus. These medicines are used to treat
acquired immune deficiency syndrome (AIDS) because the human
immunodeficiency virus (HIV) that causes the disease is a retrovirus.
Antiretroviral drugs cannot cure HIV infections, but are able to minimize conditions caused by the virus, such as opportunistic infections
that would otherwise be rapidly fatal.
BCG: Bacillus Calmette Guerin: A special strain of tubercle bacilli used
as a vaccine against tuberculosis.
Bilateral agency: A bilateral agency is a governmental organization in a
developed country that works directly with national organizations in
developing countries, usually by providing assistance in areas such as
health and education. Examples of bilateral agencies include the
United States Agency for International Development (USAID),
186
Department for International Development (DFID), Swedish

International Development Cooperation Agency (SIDA), and
Canadian International Development Agency (CIDA).
Brain drain: The exodus of professionals from one country, normally in
which socioeconomic indicators are low, to obtain improved economic and social status by working in another country.
CGIAR: Consultative Group on International Agricultural Research:
association supporting agricultural research and other activities of an
international public goods nature. CGIAR is composed of sixteen
autonomous research centers and is co-sponsored by the World Bank,
FAO, and UNDP. See http://www.cgiar.org
Chagas disease: A disease that is caused by infection with the parasite
known as Trypanosoma cruzi Chagas, carried by insects or bugs
known as triatomine or kissing bugs. These insects are very common
in Central and South America, where they inhabit poorly constructed
houses and huts. The disease involves damage to the nerves that control the heart and digestive and other organs, and eventually leads to
damage to these organs. Worldwide, Chagas disease affects over 15
million persons and kills 50,000 each year. Researchers believe that
the parasite that causes the disease is found only in the Americas.
COI study: Cost of illness study: A study that itemizes, values, and sums
the costs of a particular health problem with the aim of giving an
idea of its economic burden.
Community financing scheme: A scheme in which a community pools
funds and shares risks, and that is constituted of payees and decisionmakers/managers.
Compulsory licensing: Compulsory licensing is a provision within the
TRIPS Agreement that developing nations can use to achieve access
to patented drugs. It authorizes and provides the conditions under
which a third party may make, use, or sell a patented invention without the patent owners consent.
CRS: Congenital Rubella Syndrome: A condition in which the rubella
virus passes from an infected pregnant mother to her baby that
results in physical and mental disabilities in the baby.
CTC system: Close-to-client system: That part of the health system
including basic hospitals, health centers, and health postswhere
care is provided to the community.
Glossary
187
DAC: Development Assistance Committee of the OECD: The principal

body through which the OECD deals with issues related to cooperation with developing countries. DAC concentrates on how international development co-operation contributes to the capacity of developing countries to participate in the global economy and the capacity
of people to overcome poverty and participate fully in their societies.
DAH: Development Assistance to Health: Financial aid provided to
developing countries to support their health activities.
DALYs: Disability-Adjusted Life Years: A measure that considers the
burden of a disease to a population in terms of years of lost life,
adjusted for the effect on health to those living with the disease. The
aim is for this weighting to take into account qualitative and subjective aspects of disease and health, and value judgments of the population on the relative importance of different aspects of morbidity.
Demographic transition: A theory that relates population change to levels of economic development, in which populations shift from a condition characterized by high birth and death rates to one characterized by low birth and death rates in response to improving standards
of living. In the middle stage of transition, when death rates are low,
but birth rates remain high, populations may expand rapidly for several decades or more.
DFID: Department for International Development, United Kingdom:
British government department responsible for promoting development and the reduction of poverty. Its central focus is a commitment
to an internationally agreed target to halve the proportion of people
living in extreme poverty by 2015. In addition, associated targets
include ensuring basic health care provision and universal access to
primary education by the same date. See http://www.dfid.gov.uk/
Differential pricing: The sale of the same commodity to different buyers
at different prices.
Disease burden: A measure of the size of a health problem in an area.
Knowledge of the burden of disease can help determine where investment in health should be targeted.
DOTS treatment: Directly Observed Treatment, Short-Course: A strategy used in the treatment of TB in which healthcare workers directly
observe patients taking medication. The objective is to treat patients
by directly observing them take their medication for at least the first
two months. This is to ensure that medication is taken in the right
188
combinations and appropriate dosage in an effort to control and

reduce the incidence of multidrug-resistant TB. With direct observation of treatment, it is anticipated that 80 percent of deaths attributed
to TB worldwide will be prevented.
DPT: A combination vaccine that protects against diphtheria, pertussis,
and tetanus. In many developing countries, full vaccination against
these diseases requires a course of three doses of the vaccine. Often
the doses are referred to as DPT1, DPT 2, and DPT 3.
EPI: Expanded Program on Immunization: Program launched by the
WHO in 1974 with the goal of immunizing the worlds children
against six target diseases: diphtheria, tetanus, whooping cough (also
called pertussis), polio, measles, and tuberculosis.
Essential medicines: Essential drugs/medicines are those that satisfy the
health care needs of the majority of the population; they should
therefore be available at all times in adequate amounts and in the
appropriate dosage forms, and at a price that individuals and the
community can afford. Many of these drugs/medicines are too expensive for those in the developing world to buy. Other life-saving treatments are not available because manufacturers have abandoned their
production because they were not considered profitable enough.
Faith-based groups: Organizations that provide welfare services under
the Charitable Choice provision in The Personal Responsibility and
Work Opportunity Reconciliation Act of 1996, which restricts the US
federal government from infringing upon the religious nature of any
organization administering welfare-related assistance. Under the law,
these religious organizations retain their independence from all levels
of government. For example, the law allows faith-based groups to
discriminate on the basis of religion.
Fertility rate (total): The average number of children a woman will have
during her lifetime. The total fertility rate in developing countries
tends to be between two and seven; in industrial countries it is usually less than two.
Filariasis: Filariasis is caused by nematodes (roundworms) that inhabit
the lymphatics and subcutaneous tissues. The major forms are lymphatic filariasis, also known as elephantiasis (caused by Wuchereria
bancrofti and Brugia malayi), and onchocerciasis, also known as river
blindness (caused by onchocerca volvulus). Lymphatic filariasis is
transmitted by mosquito, affects an estimated 120 million persons
throughout the tropics, and is ranked by the World Health
Glossary
189
Organization (WHO) as the second leading cause of permanent disability worldwide. The nematodes responsible for onchocerciasis are
carried by a blackfly that is found in fertile riverside areas. These
areas are often deserted because of fear of the blindness.
Onchocerciasis constitutes a serious obstacle to socioeconomic development.
GATT: General Agreement on Tariffs and Trade: The WTOs predecessor, the GATT, was established on a provisional basis after the Second
World War in the wake of other new multilateral institutions dedicated to international economic cooperationnotably the Bretton
Woods institutions now known as the World Bank and the
International Monetary Fund. It served as the basis for the multilateral trading system from 1947 until the formation of the WTO on 1
January 1995.
GAVI: Global Alliance for Vaccines and Immunization: Alliance of multinational agencies, bilateral agencies, international development
banks, foundations, pharmaceutical industry, NGOs, and government
health programs formed in 1999 to address flagging interest and to
increase support for immunization.
See http://www.vaccinealliance.org
GEF: Global Environmental Facility: Facility established in 1991 to
forge international cooperation and finance actions to address four
critical threats to the global environment: biodiversity loss, climate
change, degradation of international waters, and ozone depletion.
See http://www.gefweb.org
GFATM: Global Fund to Fight AIDS, Tuberculosis, and Malaria: A
fund established after the UN General Assembly Special Session on
HIV/AIDS of June 2001. The fund is intended to serve as a means
for mobilizing, managing and disbursing new and additional
resources to address the challenges created by the severe epidemics of
TB and malaria and the serious threat posed by HIV/AIDS.
GHRF: Global Health Research Fund: A new fund for health research
advocated by the Commission on Macroeconomics and Health. It is
one of the major channels recommended by the Commission to
increase health-related research and development, with disbursements
of around $1.5 billion per year. This fund would support basic and
applied biomedical and health sciences research on the health problems affecting the worlds poor and on the health systems and policies
and policies needed to address them. A key goal of the GHRF would
190
be to build long-term research capacity in developing countries themselves, by providing vital funding for research groups in low-income
countries.
GNP: Gross National Product: The value of a countrys final output of
goods and services in a year. The value of GNP can be calculated by
adding up the amount of money spent on a countrys final output of
goods and services, or by totaling the income of all citizens of a country including the income from factors of production used abroad.
GPGs: Global Public Goods: Goods whose characteristics of publicness
(nonrivalry in consumption and nonexcludability of benefits) extend
to more than one set of countries or more than one geographic
region.
HAART: Highly Active Anti-Retroviral Therapy: An antiretroviral regimen, employing a combination of antiretroviral drugs and used in
AIDS treatment, that can reasonably be expected to reduce the viral
load to <50 c/ml in treatment-nave patients.
Healthy life years: A year of life in which the individual is free of health
problems.
HepB: Hepatitis B: Hepatitis is an inflammation of the liver, which
can be caused by many things such as viruses, bacterial infections,
trauma, adverse drug reactions, or alcoholism. Hepatitis B is transmitted primarily through blood, unprotected sex, shared needles, and
from an infected mother to her newborn during the delivery process.
HIB/HiB: Haemophilus influenzae B: A frequent cause of bacterial
infections (e.g., meningitis, blood infections, pneumonia, arthritis) in
infants and young children.
HIC: High-income countries: Those countries with an annual per capita
GNP of more than $9,385 in 1995, as listed in the DAC List of Aid
Recipients used for the years 19971999.
HIPC Initiative: The Heavily Indebted Poor Countries Initiative is
described by the World Bank as its program whose principal objective
is to bring countries debt burden to sustainable levels, subject to satisfactory policy performance, so as to ensure that adjustment and
reform efforts are not put at risk by continued high debt and debt
service burdens. The Initiative involves an agreement among official
creditors to help the most heavily indebted countries to obtain debt
relief.
Glossary
191
HIV/AIDS: Human Immunodeficiency Virus/Acquired Immune

Deficiency Syndrome. The retrovirus isolated and recognized as the
etiologic (ie, causing or contributing to the cause of a disease) agent
of AIDS. AIDS is the most severe manifestation of infection with HIV.
Persons living with AIDS often have infections of the lungs, brain,
eyes, and other organs, and frequently suffer debilitating weight loss,
diarrhea, and a type of cancer called Kaposis Sarcoma.
HRP: Special Programme of Research, Development and Research
Training in Human Reproduction. The Programme is a joint effort of
UNDP/UNFPA/WHO/World Bank, and was established in 1972 by
WHO. It continues to exist as an entity within the WHO Department
of Reproductive Health and Research.
IADB: Inter-American Development Bank: Regional multilateral development institution with 46 member nations. The IADB was established in December of 1959 to help accelerate economic and social
development in Latin America and the Caribbean. See
http://www.iadb.org
IBN: Insecticide-impregnated bednets: Bednets impregnated with insecticide. Studies have shown that in malaria-endemic areas, regular use
of insecticide-impregnated bednets can reduce childhood mortality by
20 percent or more. Severe disease can be reduced by up to half.
IBRD: International Bank for Reconstruction and Development: An
institution of the World Bank, providing loans and development assistance to middle-income countries and creditworthy poorer countries.
See http://www.worldbank.org/ibrd/
IDA: International Development Association: Part of the World Bank
that lends on highly concessional terms, providing long-term loans at
zero interest and a low administrative fee to the poorest of the developing countries. The mission of IDA is to support efficient and
effective programs to reduce poverty and improve the quality of life
in its poorest member countries. See http://www.worldbank.org/ida/
IFPMA: International Federation of Pharmaceutical Manufacturers
Associations: A nonprofit, nongovernmental organization whose
members are regional and national associations representing researchbased pharmaceutical companies and other manufacturers of prescription medicines. The objectives of the Federation are to deal
with questions of common interest (eg, health legislation, science,
research) in order to contribute to the advancement of the health and
welfare of the peoples of the world; promote and support continuous
192
development throughout the pharmaceutical industry of ethical principles and practices; to contribute expertise to and cooperation with
national and international, governmental or nongovernmental, organisations with the same aims; coordinate the efforts of Members to
meet these objectives. See http://www.ifpma.org
IMCI: Integrated Management of Childhood Illness: A strategy developed by WHO and UNICEF. IMCI is an integrated approach to
child health that focuses on the well-being of the whole child. IMCI
aims to reduce death, illness and disability, and to promote improved
growth and development among children under 5 years of age. IMCI
includes both preventive and curative elements that are implemented
by families and communities as well as by health facilities. See
http://www.who.int/child-adolescent-health/integr.htm
IMR: Infant mortality rate: The number of infants, out of every 1,000
babies born in a given year, who die before reaching age 1. The lower
the rate, the fewer the infant deaths, and generally the greater the
level of health care available in a country.
ITN: Insecticide-treated mosquito net. See IBN.
IVR: Initiative for Vaccine Research: A WHO/UNAIDS initiative
designed to bring the various vaccine research efforts of WHO and
UNAIDS together, in order to streamline these activities, maximize
synergies, and increase their focus. Its mission is to guide, enable, and
facilitate the development, clinical evaluation, and worldwide access
to safe, effective, and affordable vaccines against infectious diseases
of public health importance, especially in developing countries.
LDC: Least-developed country: 1n 1997, the United Nations and the
DAC List of Aid Recipients listed 48 countries as "least developed
countries" (LDCs). The Economic and Social Council of the United
Nations reviews the list every 3 years. A country qualifies to be added
to the list of LDCs if it meets inclusion thresholds of three criteria:
low income, as measured by the gross domestic product (GDP) per
capita (in 2001, the threshold for low income is a per capita GDP of
less than $800); weak human resources, as measured by a composite
index (Augmented Physical Quality of Life Index) based on indicators
of life expectancy at birth, per capita calorie intake, combined primary and secondary school enrollment, and adult literacy; and low
level of economic diversification, as measured by a composite index
(Economic Diversification Index) based on the share of manufacturing in GDP, the share of the labor force in industry, annual per capita
Glossary
193
commercial energy consumption, and United Nations Conference on

Trade and Development merchandise export concentration index.
LEB: Life expectancy at birth: The average number of years newborn
babies can be expected to live based on current health conditions.
This indicator reflects environmental conditions in a country, the
health of its people, the quality of care they receive when they are
sick, and their living conditions.
Leishmaniasis: Leishmaniasis refers to several different illnesses caused
by infection with an organism called a protozoan (simple single-celled
organisms). The types of protozoa that cause leishmaniasis are carried
by the blood-sucking sandfly. The course of the disease depends on
the specific type of protozoa, and on the type of reaction the protozoa elicits from the patients immune system. About 20 million people
throughout the world are infected with leishmaniasis.
Leprosy: A chronic disease caused by infection with an acid-fast bacillus
of the genus Mycobacterium (M. leprae). It is characterized by the
formation of nodules on the surface of the body, especially on the
face, or by the appearance of tuberculoid macules on the skin that are
accompanied by loss of sensation. If untreated, it leads to involvement of nerves with eventual paralysis, wasting of muscle, and production of deformities and mutilations. In 2000, there were 680,000
registered cases and an estimated 1.6 million total cases of leprosy
worldwide.
LIC: Low-income countries: Those countries with an annual per capita
income of less than $765 in 1995, as listed in the DAC List of Aid
Recipients used for the years 19971999. Under the DAC classification, LICs comprise both LDCs and OLICs.
LMIC: Lower-middle-income countries: LMIC countries have a Gross
National Product per capita equivalent to more than $756 but less
than $2,995 (1999). The standard of living in LMICs is higher than
in low-income countries, and people have access to more goods and
services, but many people still cannot meet their basic needs.
Lymphatic filariasis: Also known as elephantiasis. See filariasis.
Malaria: A tropical parasitic disease that kills more people than any
other communicable disease except tuberculosis. Malaria is transmitted through the bite of an Anopheles mosquito, and, if promptly
diagnosed and adequately treated, is curable. Symptoms include high
fever, severe chills, enlarged spleen, repeated vomiting, anemia, and
jaundice.
194
Maternal mortality rate: The maternal mortality rate is the number of

maternal deaths per 100,000 women of reproductive age (1549
years old).
MDG: Millennium Development Goals: Goals adopted in the
Millennium Declaration at the General Assembly of the United
Nations in September 2000. They focus on seven areas: Income
Poverty, Food Security and Nutrition, Health and Mortality,
Reproductive Health, Education, Gender Equality and Womens
Empowerment, and the Environment.
MMR: A vaccine against measles, mumps, and rubella.
MMV: Medicines for Malaria Venture: A public-private partnership of
global public health organizations, the pharmaceutical industry, government ministries, research institutions, and foundations that aims
to develop new, effective, and affordable anti-malarial drugs.
Mortality rate: The per capita death rate in a population. (See also IMR,
Maternal mortality rate, and Perinatal mortality rate.)
MRC: Medical Research Council: UK-based research organization that
aims to improve health by promoting research into all areas of medical and related science. It supports medical research in three main
ways: through its research establishments; grants to individual scientists; and support for post graduate students. See
http://www.mrc.ac.uk/
Multilateral agency: An agency involving more than two nations or parties. Multilateral lending agencies include the World Bank, the
International Monetary Fund, and the Inter-American Development
Bank.
NCD: Noncommunicable diseases: Diseases that cannot be transmitted
between people (asthma, for example).
NCMH: National Commission on Macroeconomics and Health: A temporary official group within a developing country responsible for
organizing and leading the task of scaling up health interventions,
recommended by the Commission on Macroeconomics and Health.
The NCMH, or its equivalent, would be chaired jointly by the
Ministers of Health and Finance and would incorporate key representatives of civil society. The group would assess national health priorities, establish a multi-year strategy to extend coverage of essential
health services, take account of synergies with other key health producing sectors, and ensure consistency with a sound macroeconomic
policy framework. The plan would be predicated upon greatly
Glossary
195
expanded international grant assistance. The National Commission

would work together with the WHO and World Bank to prepare an
epidemiological baseline, quantified operational targets, and a medium-term financing plan.
NGO: Nongovernmental Organization: Private, nonprofit organizations
that pursue activities to relieve suffering, promote the interests of the
poor, protect the environment, provide basic social services, or undertake community development. NGOs often differ from other organizations in the sense that they tend to operate independently from government, are value-based, and are guided by the principles of altruism
and voluntarism.
NIH: National Institutes of Health: One of eight agencies of the Public
Health Services of the US Department of Health and Human Services.
Conducts and supports research, trains researchers, and communicates medical information. See http://www.nih.gov
OCP: Onchocerciasis Control Programme: A WHO program to bring
onchocerciasis (river blindness) under control in western Africa. See
http://www.who.int/ocp/
ODA: Official Development Assistance: Development assistance of
which at least 25 percent must be a grant or grant equivalent. The
promotion of economic development or welfare must be the main
objective. It must go to a developing country as defined by the DAC.
OECD: Organisation for Economic Co-operation and Development: An
international organization, mainly of high-income countries, helping
governments tackle the economic, social, and governance challenges
of a globalized economy.
OI: Opportunistic Infection: Certain illnesses that people with AIDS can
get and that can be life-threatening. People with healthy immune systems do not usually get these illnesses, even though most people have
the organisms that cause these illnesses in their bodies already. Only
when the immune system is damaged can the organism take advantage of the opportunity of this weakened state and cause damage.
OLIC: Other low-income countries: Countries other than LDCs with a
per capita GNP of less than $765 in 1995, as listed in the DAC List
of Aid Recipients used for the years 19971999.
Onchocerciasis: Onchocerciasis is also known as river blindness and is
one form of filariasis (see Filariasis).
OPV: Oral polio vaccine.
196
Oral rehydration therapy: The treatment of diarrhea in which the patient

drinks a special solution of salts and glucose to replace those lost as a
result of the passage of loose, watery motion.
Orphan drug law: Orphan drugs are those developed under the US
Orphan Drug Act (1983) to treat a disease that affects fewer than
200,000 people in the United States. The orphan drug law offers tax
breaks and a 7-year monopoly on drug sales to induce companies to
undertake the development and manufacturing of such drugs, which
otherwise might not be profitable because of the small potential market.
Perinatal mortality rate: The number of intrauterine deaths after 28
weeks of gestation plus deaths in the first week of life divided by the
total births. The rate is usually related to 1 year.
PIN: Population in need: The individuals that a disease prevention program or care intervention program is designed to reach.
Poverty trap: Persisting poverty.
PPP: Public-private partnership.
PPP $US: Purchasing Power Parity (adjusted dollars): A method of measuring the relative purchasing power of different countries currencies
over the same types of goods and services. Because goods and services
may cost more in one country than in another, PPP allows us to make
more accurate comparisons of standards of living across countries.
PPP estimates use price comparisons of comparable items but since
not all items can be matched exactly across countries and time, the
estimates are not always robust.
PRSP: Poverty Reduction Strategy Paper: Poverty Reduction Strategy
Papers provide the basis for assistance from the World Bank and the
International Monetary Fund as well as debt relief under the HIPC
initiative. PRSPs should be country-driven, comprehensive in scope,
partnership-oriented, and participatory. A country needs to write a
PRSP only every 3 years. However, changes can be made to the content of a PRSP using an Annual Progress Report.
Public good: A public good has the properties of nonexcludability and
nonrivalry. Nonexcludability implies that, when supplied, the direct
and/or external benefits may not readily be denied to individuals or
groups by requiring the payment of a fee or price. For example, the
entire world community now benefits from elimination of small pox,
and populations or countries could not be excluded from benefiting
Glossary
197
by instituting a fee. Nonrivalry implies that the consumption of the

benefits of a good or service by an indivicual, group, or country will
not diminish the benefit of others form the same good or service.
R&D: Research and development.
RIS: Residual insect spray: The main method of attacking adult mosquitoes in houses by spraying the inside surfaces of the walls and roof or
ceiling with a residual insecticide. The intention is that mosquitoes
will rest on the insecticide deposit and remain long enough to pick up
a lethal dose.
Schistosomiasis: Schistosomiasis, also known as bilharziasis or snail
fever, is a primarily tropical parasitic disease caused by the larvae of
one or more of five types of flatworms or blood flukes known as
schistosomes. There are five species of schistosomes that are prevalent
in different areas of the world and produce somewhat different symptoms. Intestinal schistosomiasis, caused by Schistosoma japonicum, S.
mekongi, S. mansoni, and S. intercalatum, can lead to serious complications of the liver and spleen. Urinary schistosomiasis is caused by S.
haematobium. The World Health Organization (WHO) estimates that
200 million people are infected and 120 million display symptoms.
Another 600 million people are at-risk of infection.
SWAp: Sector-wide approach: A strategy for development assistance in
which a collective group of donor countries and a recipient country
jointly plan, and commit to, a package of investments for a given sector (such as the health sector). In some cases a basket fund (a fund to
support the entire package) is established into which participating
donors contribute, and from which recipient countries make expenditures. The approach facilitates the integration of donor projects into
the development plans of the recipient countries, enhances donor
assistance coordination, promotes capacity building, and may
increase the level of funding to hitherto neglected areas within a given
sector.
STIs: Sexually transmitted infections: Infections that are passed from one
person to another during sexual contact. This may include, but is not
limited to, having intercourse. In some cases, any intimate skin-toskin contact is sufficient for transmission of the infection to occur.
Examples of STIs include HIV, chlamydia, gonorrhea, trichomoniasis,
human papilloma virus (HPV), and herpes virus (HSV).
198
TB: Tuberculosis: A chronic or acute bacterial infection that primarily

attacks the lungs, but that may also affect the kidneys, bones, lymph
nodes, and brain. The disease is caused by Mycobacterium tuberculosis, a rod-shaped bacterium. Half of all untreated TB cases are fatal.
Tuberculosis causes 2 million deaths a year. WHO predicts that
between 2000 and 2020, nearly 1 billion people will become infected
with the TB bacteria and 35 million people will die from the disease.
TDR: The Special Programme for Research and Training in Tropical
Diseases (TDR): An independent global program of scientific collaboration. Established in 1975 and co-sponsored by the United Nations
Development Programme (UNDP), the World Bank, and the World
Health Organisation (WHO), it aims to help coordinate, support, and
influence global efforts to combat a portfolio of ten major diseases of
the poor and disadvantaged.
TRIPS: Trade-Related Aspects of Intellectual Property Rights. As part of
the final Round (Uruguay Round) of the General Agreement on
Tariffs and Trade (GATT) in April 1994, 123 countries signed the
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS). It is an attempt to narrow the gaps in the way intellectual
property rights (the right of creators to prevent others from using
their inventions, designs, or other creations) are protected around the
world. The TRIPS Agreement also brings them under common international rules. The TRIPS Agreement obliges all signatories to provide 20-year patent protection for novel, non-obvious inventions in
all areas of technology, including pharmaceuticals. Enforcing resolutions under this agreement is the responsibility of the World Trade
Organization (WTO).
Trypanosomiasis: A disease caused by trypanosomes, which are protozoan parasites. Infection by trypanosomes causes neurological alterations, leading to symptoms of chronic lethargy (hence the disease
also called African sleeping sickness). Without treatment, the disease
is invariably fatal. It is transmitted to humans through the bite of the
tsetse fly of the genus Glossina. Sleeping sickness is a daily threat to
more than 60 million men, women, and children in 36 countries of
sub-Saharan Africa, 22 of which are among the least-developed countries in the world. Sleeping sickness has a major impact on the development of entire regions by decreasing the labor force and hampering
production and work capacity.
Glossary
199
UMIC: Upper-Middle-Income Countries. Countries that have per capita

GDP income of between $US $2,996 and $9,265.
UN: United Nations: An international organization established in 1945
to preserve peace, solve international problems, and promote human
rights through international cooperation and collective security. See
http://www.un.org
UNDP: United Nations Development Program: The UNs principal
provider of development advice, advocacy, and grant support. See
http://www.undp.org
UNICEF: United Nations Childrens Fund: A UN agency charged with
advocating for childrens rights and helping to meet their needs. See
http://www.unicef.org
UNIDO: UN Industrial Development Organization: A UN agency that
focuses its efforts on relieving poverty by fostering productivity
growth in developing countries and countries with economies in transition. See http://www.unido.org
USAID: United States Agency for International Development:
Independent federal government agency that works to support longterm and equitable economic growth and advance US foreign policy
objectives by supporting economic growth and agricultural development, global health, and conflict prevention and developmental relief.
See http://www.usaid.gov
User fees: Payment of out-of-pocket charges at the time of use of health
care.
VCT: Voluntary counseling and testing.
Vector control: The elimination or containment of an organism (such as
an insect) that transmits a causative agent (such as a bacterium or
virus) of disease pathogen from one organism to another.
Vertical approach: Categorical approach to a particular disease.
VPD: Vaccine preventable disease.
WB: The World Bank: A development finance institution owned by 183
countries. The World Bank Group is one of the worlds largest
sources of development assistance, providing $17.3 billion in loans in
FY2001. See http://www.worldbank.org
WHO: The World Health Organization: A specialized agency of the
United Nations, focusing on health issues among its 191 Member
States. WHO provides technical cooperation for health among
nations, carries out programs to control and eradicate disease and
strives to improve the quality of human life.
200
WTO: The World Trade Organization: The only international organization dealing with the global rules of trade between nations. Its main
function is to ensure that trade flows as smoothly, predictably, and
freely as possible. See http://www.wto.org

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Macroeconomic and Health

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Macroeconomics and Health:

Investing in Health for

Information concerning the content of the report should be referred to:

Copies of this publication can be obtained from:

Macroeconomics and Health:

Presented to Gro Harlem Brundtland,

World Health Organization

WHO Library Cataloguing-in-Publication Data

World Health Organization 2001

Publications of the World Health Organization enjoy copyright protection in accordance

The Commission Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Biographical Sketches of Commission Members . . . . . . . . . . . . . . . . . .141

Titles of Reports of CMH Working Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151

Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183

Macroeconomics and Health:

The Commission on Macroeconomics and Health (CMH) was established

The Commissioners wish to thank WHO Director-General Dr. Gro

Executive Summary of the Report

Macroeconomics and Health

Table 1. Life Expectancy and Mortality Rates, by Country Development

Memo: sub-Saharan Africa

India, China, and other developing countries unless addressed by greatly

the special burdens of some of these conditions on women, the well-being

Macroeconomics and Health

each stage, and that both must be sustained by an intensive partnership.

Macroeconomics and Health

The Commission worked hard to examine whether the low-income

Macroeconomics and Health

ing treatment protocols in low-income countries.7 There is still much to be

Finally, we need a greatly enhanced system of advising and training

Macroeconomics and Health

Macroeconomics and Health

Macroeconomics and Health

coverage of prevention programs for highly vulnerable groups including

Macroeconomics and Health

Table 2. Key Findings on the Linkages of Health and Development

Macroeconomics and Health

Table 3. An Action Agenda for Investing in Health for

Macroeconomics and Health

Table 4. Recommended Donor and Country Commitments

of which: Global Fund to Fight

Total Donor Commitments

Domestic Resources for Health

Country-Level Programs in Low-Income Countries

Note: Recommendations are for annual commitments in a global scaled up program. As

The Commission Report

Evidence on Health and Development

Macroeconomics and Health

The Commission Report

these diseases, therefore, inherently constitutes a poverty-reduction effort

100 < IMR

IMR > 150

Initial Income, 1965

$750 < GDP $1,500

$1,500 < GDP $3,000

$3,000 < GDP $6,000

GDP > $6,000

Macroeconomics and Health

The Commission Report

High malaria prevalence, for example, has been shown to be associated

Macroeconomics and Health

Economic Policies and Institutions

Human Capital, including: